Company car benefit and fuel charge


Ronald Raygun

It is not entirely clear to me how contributions which an employee
makes for private use of a company car are counted against the
benefit charge.

The rules say that if the employee pays for all private fuel, then the
fuel benefit charge does not apply. In cases where for simplicity of
admin all fuel is paid for by the employer, but the employee reimburses
at a mileage rate at least equal to the "advisory fuel rates" (currently
of the order of 12p/mile), then this requirement is met.

The rules also say that any payment the employee makes for use of the car
is discounted against the car benefit. Examples in the guide show such
payments being made on a fixed basis, e.g. so much per month.

What if the employee instead simply pays a mileage rate? Suppose the
employee pays 40p a mile to cover all private use of the car, including

Suppose a car is made available with a list price of £16k and a relevant
percentage of 25%, so that the annual taxable benefit of having the car
available for private use is £4000.

Suppose the employee does 10000 private miles and pays 40p a mile for
this, i.e. a total of £4000.

Does this reduce the taxable benefit to zero, or is an appropriate
portion (say 12p/mile) of the 40p/mile deducted as covering the cost of
fuel, and only the remaining 28p/mile counted against the benefit, thus
reducing it only to £1200?


Feb 19, 2011
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You are mixing up both the Car benefit and the Fuel Benefit,

Both of these benefits are calculated separately, and any reimbursement for fuel or car are not linked to each other,

the example you quoted of the benefit of having the car available for private use is £4000, you cannot deduct the fuel reimbursement from the Car benefit, hope you get the point.

Both are independent.

let me know if there's any more queries.



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