When a company car is provided for an employee or director, the employee incurs a taxable benefit based on the car’s original list price multiplied by its CO2 emissions percentage. Additionally, if the employer pays for private fuel, this benefit must be reported on form P11d, unless the employer has arranged with HMRC to handle the tax on these benefits through monthly payroll.

If the employee does not fully reimburse the employer for private mileage, the taxable benefit is based on a notional list price of £27,800 multiplied by the vehicle’s CO2 emissions percentage, potentially up to 37%, resulting in a benefit of £10,286 for a high-emission car. This translates to £4,114 in income tax for a higher rate taxpayer and £1,419 in class 1A national insurance contributions payable by the employer.

The HMRC advisory fuel rates, applicable from 1 June 2024, are listed at the end of this newsletter and are updated quarterly due to recent fuel price volatility. Note that this benefit is all or nothing—without full reimbursement, there is an additional taxable benefit. The deadline for reimbursing private fuel for the 2023/24 tax year is 6 July 2024.