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Payback company car private fuel

30 May 2024

Where an employee with a company car is provided with fuel for their own private use by their employers, the default position is that the employee is required to pay the car fuel benefit charge.

When employees receive a company car, they often enjoy the added benefit of employer-provided fuel. However, this convenience comes with a tax implication known as the car fuel benefit charge. This charge is based on the CO2 emissions rating of the car and is multiplied by the car fuel benefit multiplier, currently £27,800.


Car Fuel Benefit Charge Explained

This tax applies if employees use the provided fuel for private purposes, including commuting. To avoid this charge, employees can ‘make good’ by reimbursing their employer for the cost of private fuel use. They should keep a log of their private mileage and use advisory fuel rates to calculate the repayment amount. These rates are updated quarterly to reflect actual fuel costs.


Reimbursing Private Fuel Costs

Reimbursing for private fuel use allows employees to avoid the car fuel benefit charge, saving them from the additional tax. It’s usually more cost-effective to repay the employer for private fuel, especially if the employee’s private mileage is low.


Record-Keeping and Compliance

Employees must keep a detailed log of their private mileage to prove they have paid for all private fuel used. Without this proof, HMRC will impose the car fuel benefit charge. Meticulous record-keeping is crucial.

For the tax year 2023-24, the deadline to reimburse private fuel provided is July 6, 2024. By meeting this deadline, employees ensure compliance with tax regulations and avoid unnecessary charges.

In summary, the car fuel benefit charge is a tax on private fuel use provided by employers. By reimbursing their employer for private fuel use and keeping accurate records, employees can manage their tax liabilities effectively and demonstrate compliance with HMRC regulations. This process supports responsible financial planning and reflects the government’s commitment to economic growth.

Source: HM Revenue & Customs Tue, 28 May 2024 00:00:00 +0100

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