Cars - company cars (including fuel)
This guide explains your tax and National Insurance contributions (NICs)
obligations if you provide an employee with a company car, or with fuel
for it.
On this page:
Cars for business-only use
Definitions or restrictions
Business use only covers the following two types of journey:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer)
- journeys related to an employee's attendance at a temporary workplace
Everything else counts as private use.
What to report, what to pay
Provided you prohibit private use of the car and no private use actually
occurs, you have:
- no reporting requirements
- no tax or NICs to pay
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Cars for private use
This section contains an overview of the rules in this area. Follow
the link below for technical guidance that provides greater detail on
the rules and covers situations in which different rules apply, including
provision of a chauffeur or a car costing more than £80,000.
EIM23000: Technical guidance
on the car benefit charge
Definitions or restrictions
Private use covers all journeys except:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer or to external
meetings)
- journeys related to an employee's attendance at a temporary workplace
What to report, what to pay
For employees earning at a rate of less than the £8,500 per year,
you have:
- no reporting requirements
- no tax or NICs to pay
For company directors or employees earning at a rate of £8,500 or more
per year, you must submit a form P46 (Car) as soon as any of the following
occurs:
- you provide a first car that's available for private use
- you provide a second or subsequent car that’s available for private
use
- you withdraw (and don’t replace) a car that’s available for private
use
- an employee or director previously earning less than the £8,500
rate starts to earn at or above that rate
And at the end of the tax year you must:
- report on form P11D – section F
- pay Class 1A NICs on the value of the car benefit
Read more about reporting car
benefits on form P46 (Car)
Work out the value to use
Follow the link below to find out how to work out the value to report
on form P11D.
Cars for private use – work
out the value to report
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Car fuel
Definitions or restrictions
Covers fuel you provide for use in company cars.
What to report, what to pay
For employees earning at a rate of less than £8,500 per year, you
have:
- no reporting requirements
- no tax or NICs to pay
Unless one of the exceptions below applies, for company directors or
employees earning at a rate of £8,500 or more per year you must:
- report on form P11D – section F
- pay Class 1A NICs on the value of the fuel benefit
Exceptions
For company directors or employees earning at or above the £8,500
rate you have no reporting requirements and no tax or NICs to pay if
either of the following applies:
- they buy their own fuel for private use (see below for a definition
of this)
- they are required to – and do - reimburse you in full during the
tax year for any fuel you provide that’s used for private journeys
Private use covers all journeys except:
- journeys forming part of an employee's employment duties (such
as journeys between appointments by a service engineer)
- journeys related to an employee's attendance at a temporary workplace
Work out the value to use
Follow the link below to find out how to work out the value to report
on form P11D.
Car fuel – work out the value to report
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Pool cars
Definitions or restrictions
Pool cars must meet the following conditions:
- used by more than one employee
- not ordinarily used by one employee to the exclusion of others
- not normally kept at or near employees’ homes
- used only for business journeys – private use is only permitted
if it is merely incidental to a business journey (for example, commuting
home with the car to allow an early start to a business journey the
next morning)
What to report, what to pay
Provided all these conditions are met, you have:
- no reporting requirements
- no tax or NICs to pay
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Car provided to an employee with a disability
What to report, what to pay
There are no reporting requirements and you have no tax or NICs to
pay provided that - throughout the tax year - the following conditions
are met:
- the car has been adapted for the employee’s special needs (or has
an automatic transmission if the employee’s disability means they
can only drive such cars)
- the car is only used for business journeys (see the explanation
in the earlier section, ‘Cars for business-only use’) or for travel
to work-related training or for ordinary commuting between the employee's
home and permanent workplace
If the employee's private use of the car goes beyond ordinary commuting,
then car and fuel benefit should be reported and Class 1A NICs paid
in line with the rules in the earlier sections on providing cars and
fuel for private use. However, in these cases there are a number of
differences that may apply when you’re calculating the value of the
benefit - follow the link below for more details.
Changes to the rules if a
car is provided to a disabled employee
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Where to report – understanding the £8,500 threshold
It’s important to choose correctly between forms P11D and P9D for each
employee. The form to use depends on the whether the employee is a director
of your company and on whether their earnings are above or below an
annual rate of £8,500. For more information – including details of what’s
included in the £8,500 threshold - follow the link below.
End-of-year forms at a glance
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More useful links
Company cars – further guidance
for employers
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Technical guidance
EIM23000: Car benefit – table
of contents
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