Expenses and benefits in kind:
a guide to tax and NICs: Car fuel benefit
What is car fuel benefit?
Car fuel benefit is a charge to tax on an employee for whom fuel is provided for private use in a car for which that employee is chargeable to car benefit. Like car benefit, it does so by treating the employee as though their earnings for tax were higher by a notional sum (the `cash equivalent' of the benefit). It applies in addition to the car benefit charge.
There are two main aspects to consider in respect of the car fuel benefit charge. These are:
- are the conditions present for a car fuel benefit charge to apply)?
- if so, what is the amount of the cash equivalent of that benefit (or car fuel benefit charge)?
The employer's obligations
The employer must:
- work out the amount of the taxable benefit of the car fuel and report it to HMRC on form P11D after the end of the tax year
- pay Class 1A NICs on the taxable benefit of the car fuel (see NIM16175 for more information about Class 1A NICs)
- account to HMRC for the tax which the employee has to pay on the taxable benefit of the car fuel.
Working sheet
The working sheet on calculating car benefit included with the P11D series of forms (P11D working sheet 2) also covers car fuel benefit.
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