EIM23667 - Car benefit: employees with frequent changes of car (from 2009/10) - car fuel benefit
The car fuel benefit legislation applies to employees with cars
subject to averaging as it does to all others. There is an index to
the guidance on car fuel benefit at
EIM23700.
Employers who operate car dealerships inevitably provide
fuel for their cars, e.g. for demonstration drives. It follows that
in such cases the car fuel benefit charge has been incurred if the
car is available for private use. In all other situations within
the scope of this guidance, fuel is also provided for the car
unless the employee personally buys for all fuel (business or
private) and is not reimbursed for any of it. Simply using fuel
already in a car and not replacing it constitutes using fuel which
has been provided for the car.
Employers providing private fuel
Employers may choose to provide private fuel to some or all employees. They should complete P11D accordingly, using the appropriate percentage for the notional car as determined at EIM23660 (also see example at EIM23664).
Employers NOT providing private fuel
Employers who choose NOT to provide private fuel to an employee
(and therefore believe that the car fuel benefit charge should be
nil) must recognise that the legal onus is on them to demonstrate
that the statutory conditions at
EIM23761 are met. They need to be able
to prove that, in the tax year, the employee was required to make
good the full cost of any fuel used privately on the basis that
private mileage was all done in the notional car, and that they
have actually done so.
The advisory fuel rates can be used for this purpose, as
described at
EIM23781; it will be necessary to
calculate the engine size of the notional car if this option is
chosen.
If they cannot, the full charge (calculated as in
EIM23763) applies.
Accounting for VAT on the private use of fuel.
These arrangements apply only for income tax and NICs. They do not affect how VAT is accounted for on any private fuel (see Notice 718 and V1-13 Chapter 19).
2008/09 and earlier years
This guidance applies only for 2009/10 and later years. Local arrangements applied for years to 2008/09 as described at EIM23640 onwards.
