Calculate tax on company cars
14/09/2023

Where an employee with a company car is provided with fuel for their own private use by their employers, the default position is that the employee is required to pay the car fuel benefit charge. The charge is determined by reference to the CO2 rating of the car applied to a fixed amount, currently £27,800. For example, a CO2 rating of 150g/km would create a taxable benefit of £9,730.

The car fuel benefit charge is not applicable when the employee pays for all their private fuel, this includes commuting to and from work. Employees should keep a log of private mileage and can then use the published advisory fuel rates to repay the cost of fuel used for private travel to their employer. In this case, HMRC will accept that there is no car fuel benefit charge, and the employee will save the Income Tax charge on the private car fuel. It will usually be much cheaper to repay your employer for private fuel rather than to pay the Income Tax charge especially if private mileage is relatively low.

The advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. However, the use of the advisory fuel rates is not binding if the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile. There is also a lower advisory rate if the company car is fully electric.


About us  

Our director-led service is supported by the expertise of our highly skilled staff. We believe that our reputation for technical excellence is one of the main reasons for the company’s continued growth. 

Since the 1960’s we have been looking after the financial needs of our diverse database of clients. The practice of today evolved from two long-established firms originating in Coventry (Luckmans) and Kenilworth (Duckett Parker) merging in 2000.

Our vision in 2000 was to combine the directors' expertise to the greatest advantage for you – our client. That ethos still holds true and has enabled us to build a relationship with our clients that lasts.

Legal

Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

Contact us

LDP Luckmans
1110 Elliott Court, Coventry Business Park
Herald Avenue
Coventry
CV5 6UB

+44 (0) 24 7662 7200
partners@luckmans.com
JUMP TO TOP