Two new appropriate percentage bands will be introduced for cars with low
carbon dioxide (CO2) emissions. Cars emitting 0-50g per kilometre of CO2 will
be charged at 5% and cars emitting 51-75g per kilometre of CO2 will be charged
The remaining percentages are all increased by 2% for cars emitting more than
75g per km of CO2. Planning for tax efficiently running company cars and car
fuel is always one of the key concerns for our clients. A review of the car policy
is advisable on an annual basis to plan for any tax savings which can be made. If
you would like to review possible car and car fuel tax savings please telephone a
member of the team.
Back to Main Page – Budget 20 March 2013
In April 2011 the rules concerning company cars are being completely overhauled. By looking at your choice of company car now, you can ensure that the changes don’t mean that you pay additional Income Tax on your benefits in kind.
From April 2011 the £80,000 restriction on the price of the car is removed and the reduction in benefit for different types of fuels is removed. This could mean that simply by keeping your existing company car you could be paying substantially increased income tax without even realising it!
Now is the time to review whether or not having your company to pay for your private fuel would be a better alternative to paying for the fuel yourself. By comparing your mileage, both business and private to the amounts of tax and fuel costs you could determine which would leave you better off in real cash terms.
As of 1st March 2011, HMRC have also introduced new advisory rates for fuel payments for companies to pay to company car drivers. The new rates are advised below;
Engine Size Petrol Diesel LPG
1400cc or less 14p 13p 10p
1401 – 2000cc 16p 13p 12p
over 2000cc 23p 16p 17p
Simply being aware of the new rules and rates can mean that you are able to make an informed decision when it comes to choosing company cars and meeting the fuel costs.
Make sure you're not still using the old fuel rates
H M Revenue and Customs issued new advisory fuel rates for use from 1 June 2010. Where employees are provided with a company car and they are reimbursed a mileage rate to cover the fuel used on business journeys, or employees are required to reimburse the employer for fuel used on private journeys then the advisory rates are normally used. Records of the journeys and payments need to be maintained to ensure that tax bills don’t arise on the mileage reimbursed or fuel paid respectively.
These rates apply to all journeys on or after 1 June 2010 until further notice:
Engine Size Petrol Diesel LPG
1400cc or less 12p 11p 8p
1401cc to 2000cc 15p 11p 10p
Over 2000cc 21p 16p 14p
Petrol hybrid cars are treated as petrol cars for this purpose. The rates are not binding, and where actual costs can be demonstrated to be different these can be used instead by agreement with your local tax office.
Where mileage rates are paid for business journeys and adequate records are maintained, then it is possible for a VAT registered business to consider reclaiming VAT on the amounts paid. The VAT that can be reclaimed can only be on the proportion of the mileage allowance that relates to fuel. The employee will need to supply VAT petrol receipts in order to allow the business to reclaim the VAT.
Extract taken from our 2010 Summer edition Tax newsletter – if you would like to subscribe please leave your details here.