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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 2017/18 is £22,600.

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.

Company vans

The taxable benefit for the unrestricted private use of vans is £3,230. There is a further £610 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge
Van £
Fuel £
Total £
Tax (20% taxpayer)
646
122
768
Tax (40% taxpayer)
1,292
244
1,536
Tax (45% taxpayer)
1,453.50
274.50
1,728
Employer's Class 1A NICs
445.74
84.18
529.92

The benefit charge for zero emission vans for 2017/18 is 20% of the standard benefit charge. 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 2017 are shown in the table below.

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 for 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.

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
1400cc or less
11p
9p
7p
1401 - 1600cc
14p
9p
9p
1601 - 2000cc
14p
11p
9p
Over 2000cc
22p
13p
14p

 

CO2 emissions
(g/km)
Appropriate percentage
Petrol
%
Diesel
%
0 - 50
9
12
51 - 75
13
16
76 - 94
17
20
95 - 99
18
21
100 - 104
19
22
105 - 109
20
23
110 - 114
21
24
115 - 119
22
25
120 - 124
23
26
125 - 129
24
27
130 - 134
25
28
135 - 139
26
29
140 - 144
27
30
145 - 149
28
31
150 - 154
29
32
155 - 159
30
33
160 - 164
31
34
165 - 169
32
35
170 - 174
33
36
175 - 179
34
37
180 - 184
35
185 - 189
36
190 and above
37

Plug-in grants

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 for cars first registered on or after 1 April 2017

A new VED system will apply to the taxation of most passenger vehicles registered on or after 1 April 2017. For the first year this is based on CO2 emissions as set out in the table below.

For following years all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, 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
First year rate
(g/km)
£
0
0
1 - 50
10
51 - 75
25
76 - 90
100
91 - 100
120
101 - 110
140
111 - 130
160
131 - 150
200
151 - 170
500
171 - 190
800
191 - 225
1,200
226 - 255
1,700
Over 255
2,000

Standard rates which apply from 1 April 2017 for cars registered from 1 March 2001 to 31 March 2017

VED Band
CO2 emissions
Standard Rate*
 
(g/km)
£
A
Up to 100
0
B
101 - 110
20
C
111 - 120
30
D
121 - 130
115
E
131 - 140
135
F
141 - 150
150
G
151 - 165
190
H
166 - 175
220
I
176 - 185
240
J
186 - 200
280
K**
201 - 225
305
L
226 - 255
520
M
Over 255
535

*Standard rate is reduced by £10 for alternative fuel vehicles with CO2 emissions above 100 g/km.
**Includes cars emitting over 225 g/km that were registered before 23 March 2006.

HGV VED rates

The government announced that it will freeze rates of VED for HGVs in 2017/18, which includes all rates linked to the basic goods rate.