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HMRC internal manual

Employment Income Manual

Car fuel benefit: reduction if fuel withdrawn and not reinstated

Section 152 ITEPA 2003

The car fuel benefit charge is incurred as detailed at EIM25510.

Reduction if fuel withdrawn and not reinstated in the same tax year

Under Section 152(2) and (3) ITEPA 2003 the charge is proportionately reduced if for any part of a year:

  • the facility for the provision of fuel as mentioned in Section 149(1) ITEPA 2003 is not available (which means there is no provision of any fuel for any purpose), or
  • the fuel is made available only for business travel, or
  • the employee is required to make good to the person providing the fuel the whole of the expense incurred by that person in connection with the provision of the fuel for the employee’s private use and the employee does make good that expense. From the 2017/18 tax year the latest date for making good the cost of all fuel provided for private use when calculating the fuel benefit charge is by 6 July following the tax year in which the private fuel is provided.

The fact that any of the conditions above is met for part of a year shall be disregarded if there is a time later in that year when any of those conditions is not met. In other words, there is no reduction if fuel is withdrawn but is reinstated later in the same tax year for the same car.

It does not matter that fuel may still be provided for a different car because this legislation operates on a car-by-car basis. Facts concerning Car 1 have no effect on liabilities in connection with Car 2.

Fuel can be withdrawn:

  • by the employer no longer providing free fuel for private use, or
  • by the employer requiring the employee to make good the cost of all private fuel provided after a set date and by the employee doing so (see EIM25650).

Note that there is no apportionment for days before provision of free fuel commenced.

The reduced amount is calculated according to the formula at EIM25615.

There is an example at EIM25610.

Possible further reductions in the fuel benefit charge

  • See EIM25565 if the car is unavailable for part of the tax year.
  • See EIM25575 if the car is shared.

Years prior to 2003/04

The fuel benefit charge had a different basis in these years.