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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’. The diesel supplement increased to 4% from 6 April 2018. It is removed altogether for diesel cars which are certified to the Real Driving Emissions 2 (RDE2) standard. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2019/20 is £24,100.

2020/21 sees the introduction of a new range of bands with appropriate percentages ranging from 2%-19% for ultra-low emission vehicles (ULEVs) emitting less than 75 g/km of CO2. Cars with emissions over this amount would see the appropriate percentage set at the lesser of: 20%, plus 1% for each 5 g/km by which emissions exceed 75 g/km; and 37%.

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 for which they may use the flat rate valuation charge.

Company vans

The taxable benefit for the unrestricted private use of vans is £3,430 for 2019/20. There is a further £655 taxable benefit if the employer provides fuel for private travel.

Van and fuel chargeVan £Fuel £Total £
Tax (20% taxpayer)686.00131.00817.00
Tax (40% taxpayer)1,372.00262.001,634.00
Tax (45% taxpayer)1,543.50294.751,838.25
Employer’s Class 1A NICs473.3490.39563.73

There is a benefit charge for zero emission vans but there is no fuel benefit for such vans.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The fuel only advisory rates below relate to company cars only and apply from 1 September 2018.

vehicleFirst 10,000 milesThereafterCar – fuel only advisory rates Engine capacityPetrolDieselLPG
Car/van45p25p1400cc or less12p10p7p
Motorcycle24p24p1401cc to 1600cc15p10p9p
Bicycle20p20p1601cc to 2000cc15p12p9p
Over 2000cc22p13p13p

 

CO2 emissionsAppropriate percentage
(g/km)Petrol %Diesel%
0 – 501620
51 – 751923
76 – 942227
95 – 992327
100 – 1042428
105 – 1092529
110 – 1142630
115 – 1192731
120 – 1242832
125 – 1292933
130 – 1343034
135 – 1393135
140 – 1443236
145 – 1493337
150 – 15434
155 – 15935
160 – 16436
165 and above37

 

Plug-in grants

The government has reformed the plug-in grant scheme, which offers grants towards the purchase of new qualifying ultra-low emission cars. The scheme will now focus on zero emission models such as pure electric and hydrogen fuel cell cars. By 9 November 2018 at the latest, the grant rate for Category 1 vehicles will reduce from £4,500 to £3,500 and Category 2 and 3 vehicles will no longer be eligible. The government has rolled out new plug-in van and motorcycle grants.

Vehicle Excise Duty (VED) rates

VED bands and rates from 1 April 2019 for cars first registered on or after 1 April 2017

For the first year this is based on CO2 emissions. However, new diesel vehicles registered after 1 April 2018 that do not meet the RDE2 standard will be charged a supplement on their First Year Rate to the effect of moving up by one VED band.

After the first year, all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and all other petrol or diesel vehicles will pay a standard rate of £145 a year. An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000 (including zero emission vehicles). This additional rate of £320 will be payable each year for five years from the end of the first vehicle licence. After the five year period the standard rate will apply.

The government proposes to change to the new worldwide harmonised light vehicle testing procedure (WLTP) for measuring CO2 emissions.

Standard rates which apply from 1 April 2017 for cars registered from 1 March 2001 to 31 March 2017

VED Band

CO2 emissions(g/km)

Standard rate*
AUp to 100£0
B101-110£20
C111-120£30
D121-130£125
E131-140£145
F141-150£160
G151-165£200
H166-175£235
I176-185£260
J186-200£300
K**201-225£325
L226-255£555
MOver 255£570

*Includes cars emitting over 225 g/km that were registered before 23 March 2006.

CO2  emissions (g/km)First year rate
0£0
1 – 50£10
51 – 75£25
76 – 90£110
91 – 100£130
101 – 110£150
111 – 130£170
131 – 150£210
151 – 170£530
171 – 190£855
191 – 225£1,280
226 – 255£1,815
Over 255£2,135