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

This includes:

• cars used for private journeys, or business journeys only
• ‘pool cars’ used by more than one employee
• cars adapted for an employee with a disability

You may not have to report or pay anything to HMRC. To be exempt, your employees must use the car or fuel in one of the following ways.

Cars available for business journeys only

Business journeys are either:

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

To be exempt, company cars used for business journeys must not be available for employees' private use.

Cars adapted for an employee with a disability

This includes cars with automatic transmission if the employees’ 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

Cars or fuel for employees who earn at a rate of less than £8,500 a year

You don’t have to pay or report on any cars or fuel that you provide for these employees, even if they use them for private journeys.

Fuel that employees pay for

You don’t have to pay or report on fuel, including for private journeys, if:

• employees buy the fuel for their own use
• you buy it and they pay you back during the tax year

‘Pool’ cars

You don’t have to pay or report on pool cars – these are cars used by more than one employee for business purposes, and normally kept on your premises.

If the cars you provide aren’t exempt, you must report them to HMRC, and you may have to pay National Insurance on their value.

Cars for private use

If your employee earns at a rate of more than £8,500 a year, or if they’re a director, you’ll need to report this to HMRC separately.

At the end of the tax year, you’ll also need to:

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

See HMRC’s guidance on car and car fuel benefit for full details of the rules and when they apply.

Fuel for private use

If your employee earns at a rate of more than £8,500 a year, or if they’re a director, and they don’t pay you back during the tax year, you’ll need to:

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

You can work out the value of cars and fuel using HMRC’s online tools, or commercial payroll software.

You can also work out the value manually on the P11D working sheet 2. You’ll have to 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

Cars adapted for an employee with a disability

Special rules apply when calculating the value of these cars if they’re made available for private use. This doesn’t include:

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

See HMRC’s guidance on car benefits for disabled drivers.

The following guides contain more detailed information:

• company cars: further guidance for employers

• car benefit code: table of contents