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.