Tax and Travel

Car and fuel benefits

The taxable petrol and diesel car benefit is based on the car's CO2 emissions. It is calculated using the car's UK list price and applying the 'appropriate percentage' as shown in the table below. The first line of figures in the table relate to the new category of qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2008/9 is increased from £14,400 to £16,900.

The percentages are reduced for cars (except QUALECs) that can be driven on alternative fuels by:

• 2% for cars manufactured to be capable of being run on E85 fuel
• 2% for bi-fuel cars or those which run on LPG only
• 3% for hybrid electric and petrol cars
• 6% for electric only cars (in practice the taxable benefit will be 9% of the price).

VAT on fuel for private use in cars

Where businesses wish to reclaim the input VAT on fuel which has some degree of private use, they must account for output VAT on a scale charge. The table below shows the VAT chargeable for quarters commencing on or after 1 May 2008.

CO2 emissions Appropriate percentage Quarterly VAT (g/km) Petrol % Diesel % Fuel scale charge £ VAT on charge £ 120 and below 10 13 138 20.55 121 to 139 15 18 207 30.83 140 to 144 16 19 221 32.91 145 to 149 17 20 234 34.85 150 to 154 18 21 248 36.94 155 to 159 19 22 262 39.02 160 to 164 20 23 276 41.11 165 to 169 21 24 290 43.19 170 - 174 22 25 303 45.13 175 - 179 23 26 317 47.21 180 - 184 24 27 331 49.30 185 - 189 25 28 345 51.38 190 - 194 26 29 359 53.47 195 - 199 27 30 373 55.55 200 - 204 28 31 386 57.49 205 - 209 29 32 400 59.57 210 - 214 30 33 414 61.66 215 - 219 31 34 428 63.74 220 - 224 32 35 442 65.83 225 - 229 33 35 455 67.77 230 - 234 34 35 469 69.85 235 and above 35 35 483 71.94

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The current rates are as follows:

Vehicle First 10,000 miles Thereafter Car / Van 40p 25p Motorcycle 24p 24p Bicycle 20p 20p

Car - fuel only advisory rates Engine Capacity Petrol Diesel Gas Up to 1400cc 11p 11p 7p 1401 - 2000cc 13p 11p 8p Over 2000cc 19p 14p 11p

The fuel only advisory rates can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers with the cost of petrol used for private journeys.

HMRC will consider claims for a higher maximum rate, if it can be demonstrated that it is necessary for an employee to use a car with higher than average fuel costs.

Car costs – VED rates

Band CO2 emissions g/km Petrol & Diesel Alternative Fuel Cars A 100 and below £0 £0 B 101 - 120 £35 £15 C 121 - 150 £120 £100 D 151 - 165 £145 £125 E 166 - 185 £170 £150 F* 186 and above £210 £195 G** 226 and above £400 £385

  * Cars registered before 23 March 2006
** Cars registered from 23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £500 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van Fuel Total Tax (20% taxpayer) £600 £100 £700 Tax (40% taxpayer) £1,200 £200 £1,400 Employer’s class 1A NICs £384 £64 £448