Fuel Reimbursement for Company Car Rates

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 not all of these rates have changed from 1st September 2014, and the rates are now as follows:

Engine Size Petrol  LPG
 1400cc or below  14p 9p
 1401 cc – 2000cc 16p 11p
 2001cc and above 24p 16p

 

Engine Size Diesel
1600cc or below 11p
1601cc – 2000cc 13p
2001cc and above 17p

 

The changes this quarter affect diesel cars only, but these changes are downwards. Therefore, care should be taken to ensure that the new rates are not exceeded if the wish is to avoid the need to report the reimbursements to HMRC.

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.