Using Company Fuel for Private Trips? Repay by 6 July or Face a Tax Bill

When Mark, a regional sales manager, received a company car from his employer, he was thrilled. Not only did it make business travel easier, but he also had access to a company fuel card, which he occasionally used for personal trips, like visiting family or commuting.

What Mark didn’t realize at first was that unless he repaid his employer for the private fuel he used, he could face a significant tax bill. That’s because HMRC treats private fuel provided by an employer as a taxable benefit unless the employee “makes good”; in other words, repays the full cost of the fuel by a specific deadline.

The Deadline You Can’t Miss

For the 2024–25 tax year, employees must repay the full cost of private fuel by 6 July 2025. If Mark misses that deadline, even by a day, he becomes liable for the car fuel benefit charge, which can be surprisingly high.

And here’s the kicker: this charge isn’t based on the actual fuel used. It’s calculated using a set multiplier and the car’s CO₂ emissions, meaning even if Mark only used a small amount of fuel privately, the tax could still be hefty.

Why Repayment Is Worth It

Let’s say Mark used about £500 worth of private fuel over the year. If he repays this amount to his employer by 6 July, he avoids the fuel benefit charge altogether. If he doesn't, he could face a tax liability based on a notional benefit of over £27,000 (the current fuel benefit multiplier), multiplied by his car’s emissions percentage. This could potentially cost him hundreds more in tax than simply paying back the £500.

The Importance of Record-Keeping

To ensure HMRC accepts that no fuel benefit has arisen, Mark keeps a detailed mileage log and calculates the cost of all private journeys. Without accurate records, the repayment may not be accepted, and the charge could still apply.

Understanding the Car Fuel Benefit Charge

The car fuel benefit charge applies to employees who receive free fuel from their employer. This means that, even limited personal use could trigger this tax liability. If you enjoy driving a company car, it’s essential to know how it affects your tax situation.

How to Calculate Your Liability

To calculate your potential tax liability, you must consider the following:

• The fuel benefit multiplier set by HMRC for the current tax year.

• The CO₂ emissions figure of your company car.

By multiplying these figures, you can estimate what your tax liability could be if you don’t make repayments on time.

Taking Action

If you’re an employee with access to a company fuel card, make sure you understand the rules regarding private fuel use. Repaying the full cost by 6 July 2025 can save you a lot of unnecessary tax.

Talk to your payroll or HR team early. Keep accurate records, and avoid the fuel benefit trap, just like Mark did. Remember, being proactive can help you manage your tax liabilities more effectively.

Final Thoughts

Navigating the rules around company cars and fuel benefits can be tricky. However, understanding the responsibilities you have can help you avoid costly mistakes. Ensure you repay any private fuel costs, watch deadlines, and maintain proper records. This diligence will go a long way in preventing surprise tax bills.

Why learning all this matters: The financial implications of mismanaging company fuel can be severe. You can keep more of your hard-earned money by taking the correct steps now.

Don’t let the intricacies of company policies catch you off guard. Be informed, stay organized, and enjoy the benefits of your company car stress-free.