Employer-provided ‘free’ fuel for private mileage: benefit or liability?

Employees who are in receipt of company funded fuel used privately will see their benefit-in-kind tax bills rise from April 6, 2010.

The Chancellor announced that the fuel benefit charge multiplier will increase from £16,900 to £18,000, while the van fuel benefit charge – on which tax on ‘free’ van fuel is paid – will increase from £500 to £550.

It means that for company car drivers in receipt of employer paid for fuel used privately that those with a vehicle with a P11D value above £18,000 will pay more in tax on fuel than they will on their vehicle.

Additionally, the breakeven point at which ‘free’ fuel becomes viable increases by about 1,000 private miles a year to approximately 16,400 miles on an average upper medium car.

From April 2010, the Government set figure for calculating the tax due on employer-provided ‘free’ fuel for private use in a company car rises to £18,000. To calculate the tax, you need to know:

• The car’s combined fuel consumption and BIK tax percentage
• The price of fuel used
• The driver’s marginal tax rate and Government set figure

Author: Lee Sibbald, April 4, 2008

On the forum...

• Brussels sued over biofuel 'cover up'
  
• Are Bentley now a green manufacturer?
  
• Milton Keynes plugs in to funding for electric vehicle charging points
  
• WorldAutoSteel announces participation in the United Nations Environment Program
  
• Government backs low carbon aerospace with £45m of research projects
  

Latest from ContractHireAndLeasing.com

• Entry models added to each Vauxhall range
  
• Toyota: Recall programme on course
  
• Motorists call for more action on drink and drug driving
  
• Diesel version of Nissan Murano available this year
  
• Super Toyota Aygo, super deal
  
• BMW to bring new 5 series Touring model to UK
  
• SEAT open national Fleet Business Centre
  
• Kia to debut new generation Magentis in New York
  
• Fiat removes the top from its 500C Pink
  
• ‘Revolutionary development’ to internal combustion engine announced
  

Latest from FleetDirectory.co.uk

• Responsible young drivers can earn insurance savings
  
• Lex Autolease survey reveals company cars mean fast cash for UK businesses
  
• Lombard: Fundamentals of Salary Sacrifice need to be understood by fleets
  
• ‘Not a drop; not a drag’ campaign steps up a gear
  
• Toyota say recall programme on course
  
• The CIPD People Management Awards to celebrate good practice through recession in 2010
  
• Bank of England study adds dose of realism to assessment of UK labour market outlook
  
• April’s bike tyre safety month
  
• Highways Agency to install protective screens on Woodway Lane footbridge after objects thrown from bridge
  
• Ian Lucas plugs in to the UK’s first solar-powered electric vehicle charging point