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With effect from 6 April 2011, the list price cap of £80,000 is withdrawn.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.