The following Employment Tax guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:
When an employer provides fuel for a company car, a taxable benefit is likely to arise. The taxable benefit is specifically known as the fuel benefit charge. The fuel benefit charge arises in addition to the company car taxable benefit.
Detailed guidance on each of the following sections to cover specific circumstances is available at Simon’s Taxes E4.629 and from HMRC at EIM25500 onwards.
The definition of ‘provided’ stated in the legislation is very broad. Fuel is treated as having been provided if any of the following applies:
any liability in respect of the provision of fuel for the car is discharged directly by the employer (eg by payment of an invoice)
a non-cash voucher or credit token (such as a fuel card) is used to obtain fuel
a non-cash voucher or credit token is used to obtain money to pay for the fuel, or
the employer reimburses the employee any sum for the cost of the fuel
ITEPA 2003, s 149(3)
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 by the employer, it is worth considering whether the disguised remuneration provisions in ITEPA 2003, ss 554A–554Z21 (Pt 7A) apply, as those rules have priority over most of the other rules for taxing employment income. The rules are discussed in detail in the Disguised remuneration ― overview guidance note.
Almost any employee receives a taxable benefit when provided with fuel for private use (or amounts to cover fuel expenditure) by an employer in relation to a company car. The car fuel benefit charge replaces any other potential tax liability in relation to the provision of fuel, eg cash reimbursed to an employee for fuel which is then used in private mileage.
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