Fuel for company cars and vans

By Tolley
  • (Updated for Budget 2020)

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Fuel for company cars and vans
  • Fuel for a company car
  • Fuel for a company van
  • Reduction of the cash equivalent
  • Advice
  • Other issues
  • Tax treatment where the fuel is provided via salary sacrifice arrangement

In addition to the benefit charge for the private use of company cars or company vans, if the employer pays for the employee’s private fuel, there will be a separate benefit assessed. If the employer only pays for fuel for business journeys, no benefit will arise.

If the private fuel is provided to a lower-paid minister of religion (earnings of less than £8,500 per year including cash equivalent of benefits), the benefit is not chargeable to tax. See the Employment income guidance note. 

ITEPA 2003, ss 290C–290E

If there is a taxable benefit, the cash equivalent depends on whether the fuel is provided in connection with a company car or company van. However, the rules on reimbursement of private fuel and reduction for unavailability of the vehicle / withdrawal of the fuel are the same for both.

HMRC provides an Expenses and benefits from employment toolkit , which is a guide for employers and their advisers on the risks associated with the end of year forms P11D. The toolkit is updated annually.

As with any other kind of employment reward, if the fuel is provided by a third party, rather than the employer, it is worth considering whether the disguised remuneration provisions in ITEPA 2003, Part 7A apply, as those rules have priority over most of the other rules for taxing employment income. If there is no third party, or one of the exemptions from ITEPA 2003, Part 7A applies, then the normal rules apply, as described below. The rules are discussed in detail in the Disguised remuneration ― overview guidance note.

Fuel for a company car

If an employee is provided with any fuel for private motoring in a company car (and the fuel is provided by reason of his employment, see the Employment income guidance note), the cash equivalent benefit is identified by using the formula below:

Fixed sum for the tax year x appropriate percentage = cash equivalent

The respective fixed sum for each tax year is:

Tax year Fixed sum 2019

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