Fuel ― company vans

Produced by Tolley in association with Philip Rutherford
  • (Updated for Autumn Budget 2021)

The following Employment Tax guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Fuel ― company vans
  • Introduction
  • Employees chargeable to tax
  • Exceptions from the fuel benefit charge
  • Restricted private use condition
  • Electric vehicles
  • Lower-paid minister of religion
  • Calculating the benefit
  • Reporting the benefit
  • If an exemption is met
  • More...

Fuel ― company vans

Introduction

An employer may provide a private fuel benefit in relation to a company van. This is where fuel is provided which is used for private mileage. For consideration of the tax consequences arising from the provision of a van benefit, please refer to the Company vans guidance note.

HMRC provides an Expenses and benefits from employment toolkit, which is a guide for employers and their advisers on the risks associated with end of year reporting and P11Ds. The toolkit is updated annually. Detailed guidance on each of the following sections to cover specific circumstances is available at Simon’s Taxes E4.630C and from HMRC at EIM22900 onwards.

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.

Employees chargeable to tax

If the provision of the van itself is exempt, then no fuel benefit arises. Therefore, a van fuel benefit will follow on only where there is a van benefit. Details of these key issues can be found in the Company vans guidance note.

Exceptions from the fuel benefit charge

There is no fuel benefit charge in the following circumstances:

  1. where the restricted private use condition for the van benefit is met

  2. in relation to electrically powered vehicles (as they have zero emissions)

  3. where the employee is required to and does ‘make good’ the cost associated with the private fuel provided to him

  4. If the private fuel is provided to a lower-paid minister of religion

Restricted private use condition

A van fuel charge can arise even if the cash equivalent of the van itself is nil. However, no fuel charge arises where there is no van benefit, including where the restricted

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