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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 2013/14 is £21,100.

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.

Future changes

The lower threshold will be reduced from 115g/km to 110g/km with effect from April 2014. The lowest appropriate percentages will remain at 0% and 5%. The appropriate percentage will increase by 1% for all vehicles with CO₂ emissions between 95g/km and 210g/km, to a maximum of 35%.

From April 2015, there will be two new appropriate percentage bands for company cars emitting 0-50g/km CO₂ (5%) and 51-75g/km CO₂ (9%). The remaining appropriate percentages are increased by 2% for cars emitting more than 75g/km CO₂ to a new maximum of 37%.

From April 2016, all the appropriate percentages are increased by 2% up to the maximum of 37%. The diesel supplement will be removed, so that diesel cars will be subject to the same level of tax as petrol cars.

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 2013.

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 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.

CO₂ emissions	Appropriate percentage		Quarterly VAT
(g/km)	Petrol %	Diesel %	Fuel scale charge £	VAT on charge £
Zero	0	0	168	28.00
Up to 75	5	8	168	28.00
76 - 94	10	13	168	28.00
95 - 99	11	14	168	28.00
100 - 104	12	15	168	28.00
105 - 109	13	16	168	28.00
110 - 114	14	17	168	28.00
115 - 119	15	18	168	28.00
120 - 124	16	19	168	28.00
125 - 129	17	20	253	42.17
130 - 134	18	21	269	44.83
135 - 139	19	22	286	47.67
140 - 144	20	23	303	50.50
145 - 149	21	24	320	53.33
150 - 154	22	25	337	56.17
155 - 159	23	26	354	59.00
160 - 164	24	27	371	61.83
165 - 169	25	28	388	64.67
170 - 174	26	29	404	67.33
175 - 179	27	30	421	70.17
180 - 184	28	31	438	73.00
185 - 189	29	32	455	75.83
190 - 194	30	33	472	78.67
195 - 199	31	34	489	81.50
200 - 204	32	35	506	84.33
205 - 209	33	35	523	87.17
210 - 214	34	35	539	89.83
215 - 219	35	35	556	92.67
220 - 224	35	35	573	95.50
225 and above	35	35	590	98.33

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time. The rates from 1 March 2013 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	13p	10p
1401 - 1600cc	18p	13p	12p
1601 - 2000cc	18p	15p	12p
Over 2000cc	26p	18p	18p

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 2013 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	105	95
E	131 – 140	125	125	115
F	141 – 150	140	140	130
G	151 – 165	175	175	165
H	166 – 175	285	200	190
I	176 – 185	335	220	210
J	186 – 200	475	260	250
K*	201 – 225	620	280	270
L	226 – 255	840	475	465
M	Over 255	1,065	490	480

*includes cars emitting over 225g/km that were registered before 23 March 2006.

Company vans

The taxable benefit for the unrestricted private use of vans is £3,000. There is a further £564 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge	Van	Fuel	Total
Tax (20% taxpayer)	£600	£112.80	£712.80
Tax (40% taxpayer)	£1,200	£225.60	£1,425.60
Tax (45% taxpayer)	£1,350	£253.80	£1,603.80
Employer's Class 1A NICs	£414	£77.83	£491.83

The flat rate of £3,000 is reduced to nil for vans emitting zero CO₂. There is no fuel benefit for such vans.

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