You must report the car or fuel to HM Revenue and Customs ( HMRC ) if they are provided as part of a salary sacrifice arrangement. If you provide the car and fuel in another way, you might not have to report or pay anything. To be exempt, your employees must use the car or fuel in one of the following ways. Privately owned cars You do not have to pay anything on cars that directors or employees own privately. Cars available for business journeys only Business journeys are either: journeys that are part of your employee’s duties, eg a service engineer travelling to an appointment journeys an employee has to make to get to a temporary workplace To be exempt, you must tell your employee not to use the vehicle for private journeys and check that they do not. Cars adapted for an employee with a disability This includes cars with automatic transmission if the employee’s disability means they need this. These cars are exempt if the only private use is for: journeys between home and work travel to work-related training Fuel that employees pay for You do not have to pay or report on fuel, including for private journeys, if either: employees buy the fuel for their own use you buy it and they pay you back during the tax year, and their payment is equal to or more than the amount you paid ‘Pool’ cars You do not have to pay or report on ‘pool’ cars. These are cars that are shared by employees for business purposes, and normally kept on your premises. You’ll have to pay if a pool car is driven for private use, or if a car is shared by employees and does not qualify as a pool car. Cars provided to close relatives You do not have to pay anything if both: you’re an employer who’s an individual, eg a sole trader you’re providing the car to someone who works in your business, but only because they’re a close relative and not because they work for you (eg you give your child a car as a birthday present) A close relative includes: your spouse or civil partner your son or daughter, and their spouse or civil partners your parents any other dependants or guests of your household

What to report and pay

If the cars you provide are not exempt , you must report them to HM Revenue and Customs ( HMRC ), and you may have to pay National Insurance on the value of the benefit . Cars for private use You’ll need to report this to HMRC separately . At the end of the tax year, you’ll also need to: report on form P11D pay Class 1A National Insurance on the value of the car benefit See HMRC ’s guidance on car and car fuel benefit for full details of the rules and when they apply. Fuel for private use If your employee does not pay you back for the fuel they use privately during the tax year, you’ll need to: report on form P11D pay Class 1A National Insurance on the value of the fuel benefit Fuel for volunteer work You can pay or refund the fuel costs (using the Advisory Fuel Rates) of your employees doing volunteer work. This is a benefit and you’ll need to either: report on form P11D report through a PAYE Settlement Agreement if you wish to pay tax and National Insurance contributions on your employee’s behalf Keeping records You must keep records of all your employees’ expenses and benefits. You should keep a record of the car’s list price - you’ll need this when you work out the value of the benefit .

You can work out the value of cars and fuel using online tools from HM Revenue and Customs ( HMRC ) or your payroll software. You can work out the value manually on the P11D working sheet 2 . Use this method if both of the following apply: the car was unavailable for at least 30 consecutive days during the tax year you were providing fuel for private use, but stopped doing this You can use advisory fuel rates to work out mileage costs in some situations, eg if you pay an employee back for fuel they’ve used for business travel. You have to pay employers’ National Insurance on some motoring costs if they’re considered employee benefits, eg parking permits, drivers, toll bridge fees and congestion charges. You do not pay it on running costs like servicing and insurance. Cars adapted for an employee with a disability Special rules apply when calculating the value of these cars if they’re available for private use. This does not include: journeys between home and work travel to work-related training For HMRC ’s guidance on car benefits for disabled drivers, see sections 12.7, 12.15 and 12.30 of Expenses and benefits - a tax guide . Salary sacrifice arrangements If the cost of the cars and fuel is less than the amount of salary given up, report the salary amount instead. These rules do not apply to arrangements made before 6 April 2017 - check when the rules will change .

The following guidance contains more detailed information: car benefit code: table of contents

Expenses and benefits: company cars and fuel

Overview

As an employer providing company cars and fuel to your employees, you have certain National Insurance and reporting obligations.

You’ll usually need to report:

company cars used for private journeys
fuel for private journeys
fuel for volunteer work

View a printable version of the whole guide

Expenses and benefits: company cars and fuel

Overview

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Expenses and benefits: company cars and fuel

Overview

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