Skip to content
Industry & Market News

Company car fuel benefit rises

The Pre Budget Report has pushed up the taxes on business car motoring. </p><p>From next April the taxable benefit for receiving 'free fuel' goes up.</p><p> The tax arises when a business pays for all fuel used by its staff, both on company business and for private use.</p><p> The fixed figure charge will rise from L14,400 to L16,900.</p><p> The Government says it is part of its plan to discourage unnecessary mileage and reduce carbon output.</p><p> For the driver of a car with a tax band rating of 25% - such as the Honda CR-V 2.0i SE pictured - the monthly taxable benefit goes up from L120 per month to L141 per month (for a 40% tax payer). </p><p>Or over 1000 private miles per month to make the 'free' fuel worthwhile. "This is further demonstration of the Government's wish to ensure any encouragement to drive extra miles is removed," said Harvey Hughes, manager - corporate operations, Honda. </p><p>"While choosing a low emission car should also be at the forefront of a business owner's decision-making." </p><p> Here's how the company car fuel benefit is calculated.</p><p> <strong>The company car fuel benefit charge</strong> <UL><LI>Multiply the new rate of L16,900 by the car's CO2 tax band <LI>If it's 25% that's 25% of L16,900 - a liability of L4225 <LI>Multiply that by the driver's income rate <LI>Say it's 40%, that's a taxable benefit of L1690 <LI>Which is equivalent to L141 per month</UL> </p><p> <strong>Further information</strong> <UL><LI>Click on the highlighted link if you want to know more about the <a href="https://www.businessmotoring.co.uk/pages/LawTaxfull.asp?id=26" title="see our Law & Tax section" target="_blank">company car fuel benefit charge</a>.</UL>

2 min read
Share
275_NightDriving246x1551

The Pre Budget Report has pushed up the taxes on business car motoring.

From next April the taxable benefit for receiving ‘free fuel’ goes up.

The tax arises when a business pays for all fuel used by its staff, both on company business and for private use.

The fixed figure charge will rise from £14,400 to £16,900.

The Government says it is part of its plan to discourage unnecessary mileage and reduce carbon output.

For the driver of a car with a tax band rating of 25% – such as the Honda CR-V 2.0i SE pictured – the monthly taxable benefit goes up from £120 per month to £141 per month (for a 40% tax payer).

Or over 1000 private miles per month to make the ‘free’ fuel worthwhile. “This is further demonstration of the Government’s wish to ensure any encouragement to drive extra miles is removed,” said Harvey Hughes, manager – corporate operations, Honda.

“While choosing a low emission car should also be at the forefront of a business owner’s decision-making.”

Here’s how the company car fuel benefit is calculated.

The company car fuel benefit charge

  • Multiply the new rate of £16,900 by the car’s CO2 tax band
  • If it’s 25% that’s 25% of £16,900 – a liability of £4225
  • Multiply that by the driver’s income rate
  • Say it’s 40%, that’s a taxable benefit of £1690
  • Which is equivalent to £141 per month

Further information

Cost of ‘free’ fuel goes up in Pre Budget Report

Related