Gerry MacCrossan
Where a company car is provided for use by an employee or director there is a benefit in kind taxable on the employee based on the vehicle’s original list price multiplied by the CO2 emissions percentage for that vehicle. If the employer also pays for private fuel, there is an additional benefit in kind that must be reported on form P11d unless the employer has arranged with HMRC to handle the tax on these benefits through the monthly payroll.
Note that unless the employee fully reimburses the employer for private mileage, the additional benefit in kind is based on a notional list price of £27,800 multiplied by the CO2 emissions percentage for that vehicle. For a car with high CO2 emissions, this could be as much as 37%, equating to £10,286, which would result in £4,114 in income tax for a higher-rate taxpayer. This would equate to a significant amount of fuel! Additionally, the employer would need to pay £1,419 in Class 1A National Insurance contributions.
The table in the Advisory Fuel Rate for Company Cars article sets out the HMRC advisory fuel rates that apply from 1 June 2024. These are published quarterly due to the volatility in petrol and diesel prices in recent years.
Please note that this is an all-or-nothing benefit; unless there is full reimbursement, there is an additional taxable benefit. The deadline for reimbursing private fuel is 6 July 2024 for the 2023/24 tax year.