All things Cars 2022
Car benefits, private fuel and fuel rates
Where an employee is provided with a motor car with zero CO2 emissions there was no taxable benefit in kind for 2020/21 although the charge increases to 1% of original list price for 2021/22 and then 2% in 2022/23.
HMRC have updated the advisory fuel rates for employees reimbursing their employer for private mileage to eliminate a private fuel benefit. There appears not to have been a significant increase in petrol and diesel prices in the period under review and as such the reimbursement rates have remained the same. The only change is to one of the LPG rates. However, we expect a change when the 1 June 2022 rates are published.
Note that where employers do not pay for fuel for company cars these same rates can be claimed by employees in respect of business mileage.
These are the HMRC suggested reimbursement rates for employees' private mileage using their company car from 1 March 2022. Where there has been a change the previous rate is shown in brackets.
Where there has been a change, the previous rate is shown in brackets: -
|1400cc or less||13p||8p (9p)|
|1600cc or less||11p|
|1401cc to 2000cc||15p||10p|
|1601cc to 2000cc||13p|
Note that for hybrid cars you must use the petrol or diesel rate which may differ significantly from the actual fuel costs. The advisory electricity rate for fully electric cars is 5 pence per mile.
Employees should carefully consider whether it is advantageous having private fuel provided for their company car. Remember that the P11d benefit for having private fuel provided for a company car in 2021/22 is £24,600 multiplied by the CO2 emissions percentage for that vehicle, rising to £25,300 for 2022/23.
For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% x £24,600 = £9,102 for 2021/22. If they are a higher rate taxpayer that would mean £3,641 tax. That is an awful lot of private fuel!
On top of that there would be 13.8% Class 1A NIC payable by the employer = £1,256 (15.05% next year = £1,409).