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 two lines of figures in the table relate to qualifying low emissions cars (QUALECs).

The car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2011/12 is £18,800.

For cars which cannot produce CO2 engine emissions under any circumstances when driven (‘zero emission cars’, including those powered solely by electricity), the appropriate percentage is reduced to 0%, thereby reducing the car benefit charge to nil.

For cars emitting between 1 and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for 5 years from 6 April 2010.

List price cap

With effect from 6 April 2011, the list price cap of £80,000 is withdrawn. This will increase substantially the tax charge for drivers of very expensive cars. For example for a car with a list price of £170,000 and CO2 emissions of 320g/km, the annual taxable benefit will increase from £28,000 to £59,500.

Future changes

From 6 April 2012 the table of tax bands will be extended down to a new 10% band for cars emitting up to 99g/km. This will replace the existing 10% band, so that QUALECs will no longer exist as a separate category. The rate for emissions of 100g/km will be 11% and will increase by 1% for every 5g/km to a maximum of 35%, as at present.

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 shows the VAT chargeable for quarters commencing on or after 1 May 2011.

CO2 emissions
Appropriate
percentage
Quarterly VAT

(g/km)
Petrol
%
Diesel
%
Fuel scale charge £ VAT on charge 
£ (20%)
Up to 75 5 8 157 26.17
76 - 120 10 13 157 26.17
121 - 124 15 18 157 26.17
125 - 129 15 18 236 39.33
130 - 134 16 19 252 42.00
135 - 139 17 20 268 44.67
140 - 144 18 21 283 47.17
145 - 149 19 22 299 49.83
150 - 154 20 23 315 52.50
155 - 159 21 24 331 55.17
160 - 164 22 25 346 57.67
165 - 169 23 26 362 60.33
170 - 174 24 27 378 63.00
175 - 179 25 28 394 65.67
180 - 184 26 29 409 68.17
185 - 189 27 30 425 70.83
190 - 194 28 31 441 73.50
195 - 199 29 32 457 76.17
200 - 204 30 33 472 78.67
205 - 209 31 34 488 81.33
210 - 214 32 35 504 84.00
215 - 219 33 35 520 86.67
220 - 224 34 35 536 89.33
225 and above 35 35 551 91.83

 

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates at 6 April 2011 are as follows:

Vehicle First 10,000 miles Thereafter
Car / Van 45p 25p
Motorcycle 24p 24p
Bicycle 20p 20p

 

Car - fuel only advisory rates
Engine Capacity Petrol Diesel LPG
Up to 1400cc 14p 13p 10p
1401 - 2000cc 16p 13p 12p
Over 2000cc 23p 16p 17p

 

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 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 – Vehicle Excise Duty (VED) rates

VED (‘Car Tax’) rates also reflect emissions, with lower scale rates for cars using alternative fuels. The following table shows the rates which apply from 1 April 2011 for cars registered on or after 1 March 2001:

VED Band CO2 emissions (g/km) First year rate Standard rate
Petrol & Diesel Alternative fuels
A Up to 100 £0 £0 £0
B 101 – 110 £0 £20 £10
C 111 – 120 £0 £30 £20
D 121 – 130 £0 £95 £85
E 131 – 140 £115 £115 £105
F 141 – 150 £130 £130 £120
G 151 – 165 £165 £165 £155
H 166 – 175 £265 £190 £180
I 176 – 185 £315 £210 £200
J 186 – 200 £445 £245 £235
K* 201 – 225 £580 £260 £250
L 226 – 255 £790 £445 £435
M Over 255 £1,000 £460 £450
* includes cars emitting over 225g/km registered before  23 March 2006

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £550 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £600 £110 £710
Tax (40% taxpayer) £1,200 £220 £1,420
Tax (50% taxpayer) £1,500 £275 £1,775
Employer’s Class 1A NICs £414 £75.90 £489.90

 

The flat rate of £3,000 is reduced to nil for vans emitting zero CO2. There is no fuel benefit for such vans.

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