Car and Van Fuel Benefit Charges from 6 April 2025

Employers providing fuel for company cars and vans, company directors managing vehicle and fuel benefits, and HR and payroll teams handling fuel benefits.

Clarifying the tax treatment of fuel provided for company cars and vans, the impact of the April 2025 changes on fuel benefit charges, and the reporting requirements for fuel benefits on P11D.

The upcoming changes to fuel benefit charges from April 2025 will affect how fuel provided for company cars and vans is taxed. Employers must understand the new rules to avoid penalties, ensure correct reporting, and stay compliant with HMRC regulations.

Tax Treatment of Fuel Provided for Company Cars and Vans

From April 2025, the treatment of fuel provided to employees for private use will be taxed as a benefit-in-kind (BiK) for both company cars and vans. Key considerations include:

• If fuel is provided for personal use, the benefit will be taxed at a percentage of the car’s list price or based on the van fuel benefit rules.
• The CO2 emissions and fuel type of the company car will directly affect the taxable benefit charge.
• For vans, if fuel is provided for personal use, it will be treated as a taxable benefit but subject to a flat-rate charge.

Employers must correctly determine whether fuel is provided for business or personal use to avoid unintended tax liabilities.

Impact of the April 2025 Changes on Fuel Benefit Charges

Starting from April 2025, there will be changes in the fuel benefit charges:

• The charge for company car fuel will be calculated based on the car’s list price and its CO2 emissions rating, which will lead to varying tax charges depending on the vehicle’s environmental impact.
• The flat-rate charge for van fuel benefits will continue, but reporting and calculation may change depending on whether the fuel is used solely for business or mixed purposes.
• Employers will need to adjust their reporting and payroll systems to reflect these changes and ensure accurate calculation of fuel benefits.

Employers should review their current processes to ensure they align with these upcoming changes to avoid penalties.

Reporting Requirements for Fuel Benefits on P11D

Fuel benefits must be correctly reported on the P11D form for each employee who receives fuel for personal use. Key steps include:

• Reporting the value of the fuel benefit based on the car’s list price and CO2 emissions for company cars, and the flat-rate charge for vans.
• Ensuring that P11D(b) is filed for the employer’s liability, including any Class 1A National Insurance.
• For mixed-use vehicles, employers must track and report the percentage of fuel use that is personal versus business-related.

Failure to report fuel benefits accurately could lead to tax penalties and miscalculations.

Real-World Application

Real-world scenarios include:

• Employers providing fuel for company cars, and tracking personal use to ensure correct tax treatment.
• Managing fuel benefits for vans, including ensuring compliance with the flat-rate charge for personal use of van fuel.
• Accurate P11D reporting to reflect the fuel benefit charges for each employee using company-provided vehicles.

Employers should implement tracking systems and review their policies to ensure accurate reporting and compliance.

Risks and Compliance Considerations

Failure to comply with the new fuel benefit reporting rules could result in:

• Incorrectly calculated taxable benefits, leading to penalties and additional tax liabilities.
• Failure to report fuel benefits on P11D, resulting in non-compliance with HMRC.
• Increased National Insurance liabilities for the employer, if the fuel benefit is reported incorrectly.

Employers must carefully track fuel use and ensure proper classification to avoid these risks.