Where employees are provided with fuel for their own private use by their employees the car fuel benefit charge is applicable. The fuel benefit charge is determined by reference to the CO2 rating of the car, applied to a fixed amount. The fixed amount is currently £22,200. For example, in the current 2016-17 tax year a 150g/km CO2 rating would create a taxable benefit of £5,994 (£22,200 x 27%). The fuel benefit is removed if the employee reimburses their employer for all their private fuel use.
A company van is defined as ‘a van made available to an employee by reason of their employment’. The standard benefit charge for private use of a company van is £3,170. The fuel benefit for a van with significant private use is currently £598. If private use of the van is insignificant then no benefit applies.
A van benefit charge also applies for zero emission vans. This rate is tapered and will increase each year until the tax year starting 6 April 2022, when a single rate will apply with no reduction for zero emission vans. This means that employees using zero emission vans for their own private use will be liable for the charge on a tapered basis until the full charge applies from 2020-21 onwards.
The remaining transitional steps are as follows:
- 2016-17 – 20% of the full rate
- 2017-18 – 20% of the full rate
- 2018-19 – 40% of the full rate
- 2019-20 – 60% of the full rate
- 2020-21 – 80% of the full rate
- 2021-22 – 90% of the full rate
- 2022-23 – 100% of the full rate
When the transitional steps are finished in 2022-23, the van benefit charge for zero emissions vans will mirror that of conventionally-fuelled vans. The van benefit charge for a zero emission van this tax-year is £634 (£3,170 @ 20%).