All things Cars 2023
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 increased to 1% of original list price for 2021/22 and then 2% in 2022/23.
The table below sets out the HMRC advisory reimbursement rates for employees' private mileage using their company car from 1 December 2023. Where full reimbursement is made there is no taxable fuel benefit. The rates for the previous quarter, if different, are in brackets.
Remember, that provided all private fuel is fully reimbursed by the employee/director, the fuel benefit does not apply.
Where the employer does not pay for any fuel for the company car these are the amounts that can be reimbursed in respect of business journeys tax free.
Where there has been a change, the previous rate is shown in brackets: -
|1400cc or less||14p (13p)||13p (12p)||10p|
|1401cc to 1600cc||16p||13p (12p)||12p|
|1601cc to 2000cc||16p||15p (14p)||12p|
|Over 2000cc||26p (25p)||20p (19p)||18p (19p)|
For hybrid cars you must use the petrol or diesel rate and for fully electric cars the rate from 1st December 2023 is 9p (10p per mile up till 30 November 2023).
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
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, this rose 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 £25,300 = £9,361 for 2022/23. If they are a higher rate taxpayer that would mean £3,744 tax. That is an awful lot of private fuel!
On top of that there would be Class 1A NIC payable by the employer too.
For those provided with an electronic or ultra-low emission company car (emitting less than 75g of CO2 per kilometre), there will be annual increases in the benefit-in-kind percentages, and therefore the taxes paid by both employees and employers, from the 2025/26 tax year.
The fixed multipliers used to calculate benefits-in-kind on employer provided vans, van fuel (for private journeys in company vans) and car fuel (for private journeys in company cars) increased in line with the Consumer Price Index (CPI) from 6 April 2023.
The benefit-in-kind appropriate percentages for all cars will remain unchanged for 2024/25. Car and van fuel benefit charges and the van benefit charge will also remain at 2023/24 levels.
For all other company car users, there will be a 1 percentage point increase (up to a maximum of 37%) in the calculation of the benefit-in-kind in 2025/26 before being fixed for the following two tax years.
The government have also announced that they will introduce Vehicle Excise Duty on electric cars, vans and motorcycles from April 2025.