Tax and Travel – November 2017 Budget Report
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. In the Autumn Budget the Chancellor announced that the diesel supplement will be increased from 3% to 4% from 6 April 2018, but removed altogether for diesel cars which are certified to the Real Driving Emissions 2 (RDE2) standard.
The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2018/19 is £23,400.
|Petrol %||Diesel %|
|180 and above||37|
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 taxable benefit for the unrestricted private use of vans is £3,350 for 2018/19. There is a further £633 taxable benefit if the employer provides fuel for private travel.
|Van and fuel charge||Van||Fuel||Total|
|Tax (20% taxpayer)||£670.00||£126.60||£796.60|
|Tax (40% taxpayer)||£1,340.00||£253.20||£1,593.20|
|Tax (45% taxpayer)||£1,507.50||£284.85||£1,792.35|
|Employer’s Class 1A NICs||£462.30||£87.35||£549.65|
The benefit charge for zero emission vans for 2018/19 is 20% of the standard benefit charge. There is no fuel benefit for such vans.
Changes to the HMRC business mileage rates are announced from time to time.
The fuel only advisory rates below relate to company cars only and apply from 1 September 2017.
|Vehicle||First 10,000 miles||Thereafter|
|Car / Van||45p||25p|
|Car – fuel only advisory rates|
|1400cc or less||11p||9p||7p|
|1401cc to 1600cc||13p||9p||8p|
|1601cc to 2000cc||13p||11p||8p|
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 from 1 April 2018 for cars first registered on or after 1 April 2017
For the first year this is based on CO2 emissions as set out in the table below. However, in the Autumn Budget it was announced that new diesel vehicles registered after 1 April 2018 that do not meet the RDE2 standard will be charged a supplement on their First Year Rate to the effect of moving up by one VED band.
After the first year, all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and 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|
|1 – 50||£10|
|51 – 75||£25|
|76 – 90||£105|
|91 – 100||£125|
|101 – 110||£145|
|111 – 130||£165|
|131 – 150||£205|
|151 – 170||£515|
|171 – 190||£830|
|191 – 225||£1,240|
|226 – 255||£1,760|
Standard rates which apply from 1 April 2018 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||£120|
|E||131 – 140||£140|
|F||141 – 150||£155|
|G||151 – 165||£195|
|H||166 – 175||£230|
|I||176 – 185||£250|
|J||186 – 200||£290|
|K**||201 – 225||£315|
|L||226 – 255||£540|
|*Standard rate is reduced by £10 for alternative fuel vehicles with CO2emissions above 100 g/km.
**Includes cars emitting over 225 g/km that were registered before 23 March 2006.