Tax is levied on the cash equivalent of the benefit of provision of free fuel for private motoring in a company car.
If the worker is required to make good to his employer the cost of all company fuel used for private purposes, and in fact does so, the charge will be nil. For 2017/18 onwards, private use payment must be made on or before 6 July following the tax year for which the charge arises. Previously it had to be made in the tax year in question or without uncooperative delay thereafter.
The employer can compensate business mileage at rates elevated than the advisory rates if they can demonstrate that the fuel cost per mile is higher. If the employer is unable to demonstrate that fact, there is no fuel benefit charge if the payments are solely for business mileage, but the excess will not be an allowable deduction in calculating the employer’s profits.