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 car fuel benefit is calculated by applying the same percentages to the fuel multiplier, which for 2012/13 is £20,200.

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 1g/km and 75g/km the appropriate percentage is reduced to 5% (8% for diesel) for five years from 6 April 2010.

Changes from 2013/14

The lower threshold will be reduced from 120g/km to 115g/km. The lowest appropriate percentages will remain at 0% and 5%. The 10% rate will apply to cars with CO₂ emissions of 76g/km to 94g/km. The appropriate percentage will increase by 1% for all vehicles with CO₂ emissions between 95g/km and 215g/km, to a maximum of 35%.

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 2012.

CO₂ emissions	Appropriate percentage		Quarterly VAT
(g/km)	Petrol %	Diesel %	Fuel scale charge £	VAT on charge £
Zero	0	0	166	27.67
Up to 75	5	8	166	27.67
76 to 99	10	13	166	27.67
100 – 104	11	14	166	27.67
105 – 109	12	15	166	27.67
110 – 114	13	16	166	27.67
115 – 119	14	17	166	27.67
120 – 124	15	18	166	27.67
125 – 129	16	19	250	41.67
130 – 134	17	20	266	44.33
135 – 139	18	21	283	47.17
140 – 144	19	22	300	50.00
145 – 149	20	23	316	52.67
150 – 154	21	24	333	55.50
155 – 159	22	25	350	58.33
160 – 164	23	26	366	61.00
165 – 169	24	27	383	63.83
170 – 174	25	28	400	66.67
175 – 179	26	29	416	69.33
180 – 184	27	30	433	72.17
185 – 189	28	31	450	75.00
190 – 194	29	32	467	77.83
195 – 199	30	33	483	80.50
200 – 204	31	34	500	83.33
205 – 209	32	35	517	86.17
210 – 214	33	35	533	88.83
215 – 219	34	35	550	91.67
220 -224	35	35	567	94.50
225 and above	35	35	583	97.17

Plug-in grants

Motorists (private or business) purchasing a new qualifying ultra-low emission car can receive a grant of 25% towards the cost of the vehicle, up to a maximum of £5,000. The scheme has recently been extended to cover 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 75g/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.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates from 6 April 2012 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
1400cc or less	15p	12p	11p
1401 – 1600cc	18p	12p	13p
1601 – 2000cc	18p	15p	13p
Over 2000cc	26p	18p	19p

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 2012 for cars registered on or after 1 March 2001:

VED Band	CO2 emissions	First Year Rate	Standard Rate
VED Band	CO2 emissions	First Year Rate	Petrol & Diesel	Alternative Fuels
	(g/km)	£	£	£
A	Up to 100	0	0	0
B	101 – 110	0	20	10
C	111 – 120	0	30	20
D	121 – 130	0	100	90
E	131 – 140	120	120	110
F	141 – 150	135	135	125
G	151 – 165	170	170	160
H	166 – 175	275	195	185
I	176 – 185	325	215	205
J	186 – 200	460	250	240
K*	201 – 225	600	270	260
L	226 – 255	815	460	450
M	Over 255	1,030	475	465

*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.