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HMRC internal manual

Employment Income Manual

Car fuel benefit: mileage allowances paid by the employer for a provided car

Section 151(3) ITEPA 2003

The car fuel benefit charge will be nil if the employee buys fuel for business travel and the employer pays the employee a mileage allowance that does no more than meet the cost of that fuel. But there will be a charge where, for example, the payments to the employee cover travel between home and the permanent workplace (see EIM23305 for meaning of business travel and private use).

Do not assess a car fuel benefit charge in cases where the mileage allowance that is paid solely in respect of genuine business journeys exceeds the cost of fuel for those journeys. It does not follow that the excess is a payment for private fuel. In such a case the difference between the allowance received and the cost of fuel used is likely to be assessable (see EIM10150) as general earnings (see EIM00511).

Advisory fuel rates

These were introduced in January 2002. For details, see EIM25655.