Reimbursing Fuel for Company cars from 1 December 2021

As the result of recent increases in fuel prices, HMRC have increased the advisory fuel rates that apply for the reimbursement of employees’ private fuel for their company cars. The same rates apply when the employer reimburses employees for fuel used for business journeys in their company car.

The new rates apply from 1 December 2021, but you can continue to use the previous rates for up to 1 month from the date the new rates apply. Note that the electric car reimbursement rate also increases from 4p to 5p a mile.

Where there has been a change, the previous rate is shown in brackets: –

Note that for hybrid cars you must use the petrol or diesel rate which may differ significantly from the actual fuel costs. The advisory electricity rate for fully electric cars is 5 pence per mile (was 4p).

Employees should carefully consider whether it is advantageous having private fuel provided for their company car. Remember that the P11d benefit for having private fuel provided for a company car in 2021/22 is £24,600 multiplied by the CO2 emissions percentage for that vehicle, rising to £25,300 for 2022/23.

For example, a director driving a Mercedes Benz E200 saloon company car (CO2 emissions 169g per km) would be assessed on 37% x £24,600 = £9,102 for 2021/22. If they are a higher rate taxpayer that would mean £3,641 tax. That is an awful lot of private fuel!

On top of that there would be 13.8% Class 1A NIC payable by the employer = £1,256 (15.05% next year = £1,409).

Made Smarter Innovation: Sustainable Smart Factory

UK registered businesses and organisations can apply for a share of up to £20m for digital innovation projects that will improve the resource efficiency and energy efficiency of manufacturing processes in factories. The Competition closes 26 January 2022.

The Made Smarter Innovation programme, delivered by Innovate UK, part of UK Research and Innovation (UKRI), has launched a new collaborative research and development competition focusing on sustainable smart factories. The £20 million Sustainable Smart Factory competition presents an opportunity to launch a wide range of projects that bring a significant benefit to the planet, helping to achieve net zero.

Consortiums of UK registered business and organisations can apply for a share of up to £20 million for digital innovation projects that will reduce the carbon emissions of manufacturing processes in factories. The aim of the competition is to support the development of digital innovations to improve the sustainability of manufacturing processes, resulting in either reduced material or reduced energy consumption.

Applications are encouraged from consortiums comprising a mix of manufacturing and technology development capabilities working together on innovative developments or novel applications of digital technologies. Projects can:

• range from £1 million to £8 million
• run for up to two years
• tackle themes such as reducing in-process material losses, better sequencing manufacturing operations to reduce energy consumption

See: Competition overview – Made Smarter Innovation: Sustainable Smart Factory – Innovation Funding Service (apply-for-innovation-funding.service.gov.uk)