The provision of private fuel with a company car can prove to be an expensive benefit. To avoid this, many employers who provide a car to employees require those employees to pay for all fuel and then to reimburse them for all miles driven on company business. Provided that the reimbursement is at a rate not exceeding an official rate then there is no taxable benefit on the fuel and it does not need to be reported on a P11D.
The official rate differs depending on the fuel used.
Some but all of these rates have increased from 1st June 2014, and the rates are now as follows:
-
Engine size
Petrol
LPG
1400cc or below 14p
9p
1401cc – 2000cc 16p
11p
2001cc and above 24p
16p
-
Engine size
Diesel
1600cc or below 12p
1601cc – 2000cc 14p
2001cc and above 17p
As previously, these rates cannot be used by an employee as a basis on which to claim tax relief if the employer reimburses business miles at a lower rate. Any employee who thinks that the reimbursed amount is insufficient must base any claim on the actual costs incurred. Any employer who wishes to reimburse fuel at a higher rate free of tax must agree that higher rate with the tax office and obtain a dispensation.