Tax and Travel – Budget Report 18 March 2015

 

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 on the right. The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2015/16 is £22,100.

From April 2015, the five year exemption for zero carbon and the lower rate for ultra-low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be set at 0-50 g/km and 51-75 g/km.

The appropriate percentages for the remaining bands will increase by 2% for cars emitting more than 75 g/km, to a new maximum of 37%.

Future changes

From April 2016, all the appropriate percentages will be increased by 2% up to the maximum of 37%. In addition, new European standards which come into force in September 2015 require diesel cars to have the same air quality emissions as petrol cars. The 3% diesel supplement will therefore be removed in April 2016, so that diesel cars will then be subject to the same level of tax as petrol cars.

The appropriate percentage will increase by 2% for cars emitting more than 75 g/km to a maximum of 37% in each of years 2017/18 and 2018/19.

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. The table below shows the VAT chargeable for quarters commencing on or after 1 May 2014. These rates were current at the date of publication. Please check with us for any updated rates from 1 May 2015.

CO2 emissions Appropriatepercentage Quarterly VAT
(g/km) Petrol% Diesel% Flat rate valuation  £ VAT on charge
£
0 – 50 5 8 156.00 26.00
51 – 75 9 12
76 – 94 13 16
95 – 99 14 17
100 – 104 15 18
105 – 109 16 19
110 – 114 17 20
115 – 119 18 21
120 – 124 19 22
125 – 129 20 23 234.00 39.00
130 – 134 21 24 251.00 41.83
135 – 139 22 25 266.00 44.33
140 – 144 23 26 282.00 47.00
145 – 149 24 27 297.00 49.50
150 – 154 25 28 313.00 52.17
155 – 159 26 29 328.00 54.67
160 – 164 27 30 345.00 57.50
165 – 169 28 31 360.00 60.00
170 – 174 29 32 376.00 62.67
175 – 179 30 33 391.00 65.17
180 – 184 31 34 408.00 68.00
185 – 189 32 35 423.00 70.50
190 – 194 33 36 439.00 73.17
195 – 199 34 37 454.00 75.67
200 – 204 35 470.00 78.33
205 – 209 36 485.00 80.83
210 – 214 37 502.00 83.67
215 – 219 517.00 86.17
220 – 224 533.00 88.83
225 or more 548.00 91.33

Company vans

The taxable benefit for the unrestricted private use of vans is £3,150. There is a further £594 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van Fuel Total
Tax (20% taxpayer) £630 £118.80 £748.80
Tax (40% taxpayer) £1,260 £237.60 £1,497.60
Tax (45% taxpayer) £1,417.50 £267.30 £1,684.80
Employer’s Class 1A NICs £434.70 £81.97 £516.67

Zero emission vans

As previously announced, the van benefit for zero emission vans is to be increased on a tapered basis so that there will be a single van benefit charge applying to all vans by April 2020. For 2015/16 the charge will be 20% of the value of the standard van benefit charge (i.e. £630). 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 2015 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 Size Petrol LPG
1400cc or less 11p 8p
1401cc – 2000cc 13p 10p
Over 2000cc 20p 14p
Engine Size Diesel  
1600cc or less 9p  
1601cc – 2000cc 11p  
Over 2000cc 14p  

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 2015 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 £110 £100
E 131-140 £130 £130 £120
F 141-150 £145 £145 £135
G 151-165 £180 £180 £170
H 166-175 £295 £205 £195
I 176-185 £350 £225 £215
J 186-200 £490 £265 £255
K* 201-225 £640 £290 £280
L 226-255 £870 £490 £480
M Over 255 £1,100 £505 £495
* includes cars emitting over 225g/km registered before  23 March 2006

Plug-in Grants

Motorists (private or business) purchasing new qualifying ultra-low emission cars can receive a grant of 25% towards the cost of the vehicle, up to a maximum of £5,000. 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 all 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.

 

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