Advisory Fuel Rates from 1st September 2017

Fuel rates

For employees using a company car, the new fuel rates for use from 1 September are as follows:

Engine Size Petrol LPG Diesel
Amount per mile (in pence)
1400cc or less 11 7 9
1401cc to 1600cc 13 8 9
1601cc to 2000cc 13 8 11
Over 2000cc 21 13 12

For the purpose of fuel rates, hybrid cars are treated as either petrol or diesel cars.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Tax and Your Company Car

Tax Company Car.jpg

There are many factors which will influence your choice of company car. These can include the distance you travel, terrain covered, the price, your lifestyle and perhaps even your clients. However, is tax ever a consideration?

The start of the tax year saw an increase in the company car rates and indeed the rates are increasing quite significantly year on year. Assuming however that you have some degree of choice over the car make and model, you can influence the tax that you pay.

The two factors which determine the tax charge attached to a company car are the list price of the vehicle and its CO2 emissions.

The table below shows the benefit in kind charge for cars with various, hypothetical,  list prices and CO2 emissions.  The rates applicable to the current tax year (2017/18) have been used.

List price CO2 emissions Fuel type Benefit in kind value
£17,000 102g/km Petrol £3,230
£25,000 99g/km Petrol £4,500
£25,000 117g/km Diesel £6,250
£35,000 0g/km Electric £3,150
£50,000 41g/km Electric/Petrol £4,500
£50,000 155g/km Diesel £16,500

In addition to the company car benefit there is also a fuel benefit if the employer provides fuel for private use; the value of the fuel benefit is affected by the CO2 emissions but not by the list price.

Although tax will not be the only issue affecting your choice of company car, perhaps it ‘auto’ be a consideration?

If you’d like any more information please contact Green & Co Accountants.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Advisory Fuel Rates from 1st June 2017

Fuel rates

For employees using a company car, the new fuel rates for use from 1 June are as below:

Engine Size Petrol LPG Diesel
Amount per mile (in pence)
1400cc or less 11 7 9
1401cc to 1600cc 14 9 9
1601cc to 2000cc 14 9 11
Over 2000cc 21 14 13

For the purpose of fuel rates, hybrid cars are treated as either petrol or diesel cars.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

VAT Fuel Scale Charge

vat fuel scale charge.jpg

To make accounting for private use of fuel simpler, you can choose to apply the VAT fuel scale charge. This scale charge adds back a fixed sum each VAT period to account for the private use of fuel, making redundant any need to split the mileage between business and private use.

The scale charge for any given vehicle is based upon its CO2 emissions. HMRC update the scale charge table every May, and this years can be found here.

Scale charges only apply to those cars where there is allowed private usage, and when you start using the scale charge, you must use it on all your company’s cars for which there is private use.

Those using the scale charges, should be sure to keep a record of:

  • Number of cars which it is applied to
  • CO2 band of each car (or cylinder capacity if the car is too old for an emissions figure)
  • Details of when cars have been bought and/or sold.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

Advisory Fuel Rates from 1st March 2017

petrol pump nozzle with golden gas drops

For employees using a company car, the new fuel rates for use from 1st March are as below:

Engine Size Petrol-amount per mile LPG-amount per mile Diesel-amount per mile
1400cc or less 11 pence 7 pence 9 pence
1401cc to 1600cc 14 pence 9 pence 9 pence
1601cc to 2000cc 14 pence 9 pence 11 pence
Over 2000cc 20 pence 14 pence 13 pence

For the purpose of fuel rates, hybrid cars are treated as either petrol or diesel cars.

A Tax Efficient Company Car

In recent years the government has changed the way that company cars are taxed. They have been trying to encourage more people to be environmentally friendly. Consequently, the higher a car’s CO2 emissions, the higher your tax bill on the benefit in kind, and the lower the capital allowances that are available for the company.

With this in mind, Mitsubishi has recently launched the Plug-in Hybrid Electric Vehicle (PHEV) version of its all new Outlander. This vehicle comes with some impressive green credentials, only producing CO2 emissions of 44g/km and achieving a mightily impressive 148mpg.

The fact that this vehicle has such low emissions makes it the ideal company car.

In the year of purchase, the company would be able to claim back 100% of the cost of the vehicle against its tax bill.

The benefit in kind rating against the employee is only 5%. This means that an employee paying tax at basic rate would only pay £596 in tax for the use of the vehicle and fuel purchased during the year. As you can see from the table below this easily outstrips its nearest rivals:

Tax payable on benefit Mitsubishi Outlander GX4h Auto BMW X3 Xdrive SE Auto Audi Q3 S-Line Plus Auto Mercedes E-Class SE Estate Auto
At basic rate £596 £2,575 £3,040 £2,770
At higher rate £1,192 £5,150 £6,080 £5,540

If you currently live in London or travel there frequently, there is also the additional good news that the Outlander PHEV is registered as congestion charge exempt, allowing you to travel through London free of charge.There are also grants currently available on the purchase of this vehicle. You will be able to get a grant of £5,000 against the initial cost of the vehicle. British Gas are also currently able to install high speed chargers at your home, so that you would be able to take advantage of cheap Economy 7 electricity by charging your vehicle overnight.

Do you have any queries about company cars? Here at Green & Co, we are more than happy to help you.

Should you wish to read more about the new Mitsubishi Outlander PHEV, please visit the website.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Is Your Van A Car For Tax Purposes?

If you have a company vehicle which is available for private use (regardless of whether in fact, there is any such use) the taxable benefit could differ enormously depending on whether or not the vehicle is classed as a van or a car. It would normally be significantly cheaper if the vehicle is regarded as a van by HMRC.

You might be forgiven for thinking it should be straightforward – a van is a van and a car is, well, a car. Not so. Consider four wheel drives and other luxury off road vehicles  which often get reported mistakenly as vans, particularly double cab pick-ups.

HMRC consider that every mechanically road vehicle is a “car” unless:

  • The construction of the vehicle is primarily suited for e.g. goods
  • It is a motor cycle (pretty obvious!)
  • An invalid carriage
  • A vehicle of a type not commonly used as a private vehicle and unsuitable so to be used.

For vehicles such as double cab pick-ups to be classed as a car it would clearly need to satisfy the first category. The fact that the manufacturer describes the vehicle as commercial will not hold any sway. If a vehicle is designed and marketed as a multi-purpose vehicle, it is unlikely to be classed as a van.

There will be a lot of tax at stake if the wrong treatment is applied so care must be taken when completing the forms PIID to report the benefit to HMRC.

Should you need any help with this issue please do not hesitate to contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

To Have A Company Car Or Not – That Is Indeed The Question

When it comes to the question of whether one should have a company car or take a car allowance instead, most people are unsurprisingly confused. As company car benefits keep increasing, so does the tax burden. So is it more beneficial? Or should you, if your Employer provides for it, take a car allowance instead?

The conclusion is that a company car is going to be more tax efficient in the following two circumstances:

  • The car has low CO2 emissions coupled with a low level of business mileage.

For example:

Car CO2 emissions 123g/km   List price of car when new  £11,360

Car benefit for 2013/14     – 16% x £11,360  = £1,817

Assuming higher rate taxpayer  – tax due £1,817  @ 40% = £722

If the private mileage in the year is 10,000 miles this equates to tax per mile at 7.22p (722 ÷ 10,000). Based on “What Car” figures of 12,000 miles per annual total mileage over 3 years, the true cost per mile is 32p, providing a saving of 24.78p.

  • The second scenario occurs when business mileage is high, resulting in a tax deductible car allowance which does not cover the true business cost.

Example:

Car CO2 emissions  264g/km   List price of car when new £67,050

Car benefit for 2013/14   – 35% x £67,050 = £23,467

Tax due @ 40% = £9,386

On business mileage of up to 10,000 pa, an allowance at 45p per mile could be claimed resulting in a total claim of £4,500. The real cost according to “What Car” is £15,289.

After 10,000 miles the rate reduces to 25p per mile, so if the business miles were 20,000 the amount claimed would be just £7,000 whereas the true cost is £24,000 – again according to “What Car.”

Each case needs to be looked at independently, based on the type of car being provided and the private and business miles being run. In the circumstance of an employee being offered a car allowance, if they use their own car this will also have a bearing on the outcome. The answer is not always straightforward, but then when has anything to do with tax ever been!!

Should you require any further details please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.