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As an employer providing company cars and fuel to your employees, you have certain National Insurance and reporting obligations.

You鈥檒l usually need to report:

• company cars used for private journeys
• fuel for private journeys
• fuel for volunteer work

You must report the car or fuel to HM Revenue and Customs (HMRC) if they are provided as part of a salary sacrifice arrangement.

If you provide the car and fuel in another way, you might not have to report or pay anything. To be exempt, your employees must use the car or fuel in one of the following ways.

Privately owned cars

You do not have to pay anything on cars that directors or employees own privately.

Cars available for business journeys only

Business journeys are either:

• journeys that are part of your employee鈥檚 duties, such as a service engineer travelling to an appointment
• journeys an employee has to make to get to a temporary workplace

Cars adapted for an employee with a disability

This includes cars with automatic transmission if the employee鈥檚 disability means they need this. These cars are exempt if the only private use is for:

• journeys between home and work
• travel to work-related training

Fuel that employees pay for

You do not have to pay or report on fuel, including for private journeys, if either:

• employees buy the fuel for their own use
• you buy it and they pay you back during the tax year, and their payment is equal to or more than the amount you paid

Fully electric cars聽

You do not have to pay or report on charging your employee鈥檚 fully electric car if you own or hire it.聽

You may need to report it if the electric car is owned by your employee. You can check if you need to pay tax for charging an employee鈥檚 electric car.

鈥楶ool鈥� cars

You do not have to pay or report on 鈥榩ool鈥� cars. These are cars that are shared by employees for business purposes, and normally kept on your premises.

Cars provided to close relatives

You do not have to pay anything if both:

• you鈥檙e an employer who鈥檚 an individual, such as a sole trader
• you鈥檙e providing the car to someone who works in your business, but only because they鈥檙e a close relative and not because they work for you (for example, you give your child a car as a birthday present)

A close relative includes:

• your spouse or civil partner
• your son or daughter, and their spouse or civil partners
• your parents
• any other dependants or guests of your household

If the cars you provide are not exempt, you must report them to HM Revenue and Customs (HMRC), and you may have to pay National Insurance on the value of the benefit.

Cars for private use

You鈥檒l need to report this to HMRC separately.

At the end of the tax year, you鈥檒l also need to:

• report on form P11D
• pay Class 1A National Insurance on the value of the car benefit

See HMRC鈥檚 for full details of the rules and when they apply.

Fuel for private use

If your employee does not pay you back for the fuel they use privately during the tax year, you鈥檒l need to:

• report on form P11D
• pay Class 1A National Insurance on the value of the fuel benefit

Fuel for volunteer work

You can pay or refund the fuel costs (using the Advisory Fuel Rates) of your employees doing volunteer work.

This is a benefit and you鈥檒l need to either:

• report on form P11D
• report through a PAYE Settlement Agreement if you wish to pay tax and National Insurance contributions on your employee鈥檚 behalf

Keeping records

You must keep records of all your employees鈥� expenses and benefits.

You should keep a record of the car鈥檚 list price - you鈥檒l need this when you work out the value of the benefit.

You can work out the value of cars and fuel using online tools from HM Revenue and Customs (HMRC) or your payroll software.

You can work out the value manually on the P11D working sheet 2. Use this method if both of the following apply:

• the car was unavailable for at least 30 consecutive days during the tax year
• you were providing fuel for private use, but stopped doing this

You can use advisory fuel rates to work out mileage costs in some situations, such as if you pay back an employee for fuel they鈥檝e used for business travel.

You have to pay employers鈥� National Insurance on some motoring costs if they鈥檙e considered employee benefits, like parking permits, drivers, toll bridge fees and congestion charges. You do not pay it on running costs like servicing and insurance.

Cars adapted for an employee with a disability

Special rules apply when calculating the value of these cars if they鈥檙e available for private use. This does not include:

• journeys between home and work
• travel to work-related training

For HMRC鈥檚 guidance on car benefits for disabled drivers, see sections 12.7, 12.15 and 12.30 of Expenses and benefits - a tax guide.

Salary sacrifice arrangements

If the cost of the cars and fuel is less than the amount of salary given up, report the salary amount instead.

These rules do not apply to arrangements made before 6 April 2017 - check when the rules will change.

The following guidance contains more detailed information: