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Our new government will be in place by the 4th of July 2024, two days old on the 6th of July, unless there is an unexpected draw, and a re-run is required.

But the 6th is a deadline that company car drivers would be wise to note.

Does your employer pay for private fuel?

If the answer is yes then you are potentially liable to be taxed for the use of the company car and for the benefit of your employer paying for your private fuel. The way the taxable benefit is calculated is set out below.

How is the Car Fuel Benefit Charge calculated?

For the tax year 2023-24, the Car Fuel Benefit Charge is based on the figure £27,800 multiplied by the benefit in kind banding for your car.

For example: A BMW 330e has a BiK band of 12%. So, £27,800 x 12% = £3,336. If you are a 20% taxpayer, multiply £3,336 by 20% to get the annual tax amount of £667. A 40% taxpayer would pay £1,334 per year (£3,336 x 40%).

The problem with this calculation is that the tax charge is unrelated to the actual private mileage you cover in a year.

How to reduce your tax liability

HMRC are willing to cancel any liability for private fuel provided by your employer if you repay your employer for the cost of the private fuel.

To achieve this, you will need to:

  • Calculate your private mileage for the year to 5 April 2024; and
  • Multiply this mileage by the advisory car fuel rate for your company vehicle.

The BMW 330e has a 2.0 litre petrol engine. For 2023-24 the average advisory car fuel rate for that sized petrol car was approximately 13p per mile. Let’s say the private mileage for the year was 2,000 miles. To repay the private fuel to their employer would cost the driver £260 (2,000 x 13p).

The £260 payment is much lower than the tax charges – £667 for a standard rate taxpayer or £1,334 for a higher rate taxpayer.

Crunch the numbers

The key is to make the calculations and see if a repayment of private fuel is lower than the tax charge.

And we can help. But don’t forget, any repayment must be made by 6th July 2024.

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