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 Size Petrol LPG
1400cc or less 15p 10p
1401 - 2000cc 18p 12p
Over 2000cc 26p 18p
Engine Size Diesel  
1600cc or less 13p  
1601 - 2000cc 15p  
Over 2000cc 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 (g/km) First year rate Standard rate
Petrol & Diesel Alternative fuels
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 £1065 £490 £480
* includes cars emitting over 225g/km 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.