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 2008/09 increases 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 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 element £ |
| 120 and below | 10 | 13 | 138 | 20.55 |
| 121 - 139 | 15 | 18 | 207 | 30.83 |
| 140 - 144 | 16 | 19 | 221 | 32.91 |
| 145 - 149 | 17 | 20 | 234 | 34.85 |
| 150 - 154 | 18 | 21 | 248 | 36.94 |
| 155 - 159 | 19 | 22 | 262 | 39.02 |
| 160 - 164 | 20 | 23 | 276 | 41.11 |
| 165 - 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 | LPG |
| 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 - vehicle excise duty (VED) rates
Vehicle Excise Duty ('Car Tax') rates also reflect emissions, with lower scale rates for cars using alternative fuels.
| VED Band |
CO2 | Petrol & Diesel | Alternative Fuels |
|---|---|---|---|
| (g/km) | £ | £ | |
| 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 |
