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 on the right. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2017/18 is £22,600.
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 £3,230. There is a further £610 taxable benefit if the employer provides fuel for private travel.
| Van and fuel charge | Van | Fuel | Total |
|---|---|---|---|
| Tax (20% taxpayer) | £646.00 | £122.00 | £768.00 |
| Tax (40% taxpayer) | £1,292.00 | £244.00 | £1,536.00 |
| Tax (45% taxpayer) | £1,453.50 | £274.50 | £1,728.00 |
| Employer’s Class 1A NICs | £445.74 | £84.18 | £529.92 |
The benefit charge for zero emission vans for 2017/18 is 20% of the standard benefit charge. There is no fuel benefit for such vans.
Mileage rates
Changes to the HMRC business mileage rates are announced from time to time. The rates from 1 March 2017 are shown in the table below.
The fuel only advisory rates relate to company cars only. They can be applied as a tax-free maximum rate for employees claiming for petrol used on business journeys and for employees reimbursing their employers for 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.
| Vehicle | First 10,000 miles | Thereafter |
|---|---|---|
| Car / Van | 40p | 25p |
| Motorcycle | 25p | 24p |
| Bicycle | 20p | 20p |
| Car – fuel only advisory rates | |||
|---|---|---|---|
| Engine Capacity | Petrol | Diesel | LPG |
| 1400cc or less | 11p | 9p | 7p |
| 1401cc to 1600cc | 14p | 9p | 9p |
| 1601cc to 2000cc | 14p | 11p | 9p |
| Over 2000cc | 22p | 13p | 14p |
| CO2 emissions (g/km) |
Appropriate percentage | |
|---|---|---|
| Petrol % | Diesel % | |
| 0-50 | 9 | 12 |
| 51-75 | 13 | 16 |
| 76-94 | 17 | 20 |
| 95-99 | 18 | 21 |
| 100-104 | 19 | 22 |
| 105-109 | 20 | 23 |
| 110-114 | 21 | 24 |
| 115-119 | 22 | 25 |
| 120-124 | 23 | 26 |
| 125-129 | 24 | 27 |
| 130-134 | 25 | 28 |
| 135-139 | 26 | 29 |
| 140-144 | 27 | 30 |
| 145-149 | 28 | 31 |
| 150-154 | 29 | 32 |
| 155-159 | 30 | 33 |
| 160-164 | 31 | 34 |
| 165-169 | 32 | 35 |
| 170-174 | 33 | 36 |
| 175-179 | 34 |
37 |
| 180-184 | 35 | |
| 185-189 | 36 | |
| 190 and above | 37 | |
Plug-in grants
Motorists (private or business) purchasing new qualifying ultra-low emission cars can receive a grant of 35% towards the cost of the vehicle, up to a maximum of either £2,500 or £4,500 depending on the model. The scheme also covers new qualifying ultra-low emission vans, where the available grant will be 20% towards the cost of the vehicle, up to a maximum of £8,000. Vehicles with CO2 emissions of 75 g/km or less, including electric, plug-in hybrid and hydrogen-fuelled cars, are potentially eligible for the subsidy. There are strict criteria to be met before specific vehicles can be confirmed as eligible under the rules of the scheme.
Vehicle Excise Duty (VED) rates
VED bands and rates for cars first registered on or after 1 April 2017
A new VED system will apply to the taxation of most passenger vehicles registered on or after 1 April 2017. For the first year this is based on CO2 emissions as set out in the table below.
For following years all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, all other petrol or diesel vehicles will pay a standard rate of £140 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 £310 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.
Alternative fuel vehicles continue to receive a £10 reduction on the standard and first year rates.
| CO2 emissions (g/km) | First Year Rate |
|---|---|
| 0 | £0 |
| 1 – 50 | £10 |
| 51 – 75 | £25 |
| 76 – 90 | £100 |
| 91 – 100 | £120 |
| 101 – 110 | £140 |
| 111 – 130 | £160 |
| 131 – 150 | £200 |
| 151 – 170 | £500 |
| 171 – 190 | £800 |
| 191 – 225 | £1,200 |
| 226 – 255 | £1,700 |
| Over 255 | £2,000 |
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* |
|---|---|---|
| A | Up to 100 | £0 |
| B | 101 – 110 | £20 |
| C | 111 – 120 | £30 |
| D | 121 – 130 | £110 |
| E | 131 – 140 | £130 |
| F | 141 – 150 | £145 |
| G | 151 – 165 | £185 |
| H | 166 – 175 | £210 |
| I | 176 – 185 | £230 |
| J | 186 – 200 | £270 |
| K** | 201 – 225 | £295 |
| L | 226 – 255 | £500 |
| M | Over 255 | £515 |
| *Standard rate is reduced by £10 for alternative fuel vehicles with CO2 emissions above 100 g/km. **Includes cars emitting over 225 g/km that were registered before 23 March 2006. |
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HGV VED rates
The government announced that it will freeze rates of VED for HGVs in 2017/18, which includes all rates linked to the basic goods rate.