Company Car Fuel Reimbursement

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.