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 below. In the Autumn Budget the Chancellor announced that the diesel supplement will be increased from 3% to 4% from 6 April 2018, but removed altogether for diesel cars which are certified to the Real Driving Emissions 2 (RDE2) standard.

The car fuel benefit is calculated by applying the same percentages to the fuel benefit charge multiplier, which for 2018/19 is £23,400.

CO2 emissions (g/km) Appropriate percentage
Petrol % Diesel %
0 - 50 13 17
51- 75 16 20
76 - 94 19 23
95 - 99 20 24
100 - 104 21 25
105 - 109 22 26
110 - 114 23 27
115 - 119 24 28
120 - 124 25 29
125 - 129 26 30
130 - 134 27 31
135 - 139 28 32
140 - 144 29 33
145 - 149 30 34
150 - 154 31 35
155 - 159 32 36
160 - 164 33 37
165 - 169 34
170 - 174 35
175 - 179 36
180 and above 37

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 for which they may use the flat rate valuation charge.

Company vans

The taxable benefit for the unrestricted private use of vans is £3,350 for 2018/19. There is a further £633 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van £ Fuel £ Total £
Tax (20% taxpayer) 670.00 126.60 796.60
Tax (40% taxpayer) 1,340.00 253.20 1,593.20
Tax (45% taxpayer) 1,507.50 284.85 1,792.35
Employer's Class 1A NICs 462.30 87.35 549.65

The benefit charge for zero emission vans for 2018/19 is 20% of the standard benefit charge. There is no fuel benefit for such vans.

Mileage rates

Changes to the HMRC business mileage rates are announced from time to time.

The fuel only advisory rates below relate to company cars only and apply from 1 September 2017.  

Vehicle First 10,000 miles Thereafter
Car / Van 45p 25p
Motorcycle 24p 24p
Bicycle 20p 20p

Car - fuel only advisory rates

Engine Capacity Petrol Diesel LPG
1400cc or less 11p 9p 7p
1401 - 1600cc 13p 9p 8p
1601 - 2000cc 13p 11p 8p
Over 2000cc 21p 12p 13p

Plug-in grants

Motorists (private or business) purchasing new qualifying ultra-low emission cars can receive a grant of 35% towards the cost of the vehicle, up to a maximum of either £2,500 or £4,500 depending on the model. 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 75 g/km or less, including electric, plug-in hybrid and hydrogen-fuelled cars, are 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.

Vehicle Excise Duty (VED) rates

VED bands and rates from 1 April 2018 for cars first registered on or after 1 April 2017

For the first year this is based on CO2 emissions as set out in the table below. However, in the Autumn Budget it was announced that new diesel vehicles registered after 1 April 2018 that do not meet the RDE2 standard will be charged a supplement on their First Year Rate to the effect of moving up by one VED band.

After the first year, all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, and all other petrol or diesel vehicles will pay a standard rate of £140 a year. An additional rate will be added to the vehicle tax for all new vehicles with a list price of over £40,000 (including zero emission vehicles). This additional rate of £310 will be payable each year for five years from the end of the first vehicle licence. After the five year period the standard rate will apply.

Alternative fuel vehicles continue to receive a £10 reduction on the standard and first year rates.

CO2 emissions First year rate
(g/km) £
0 0
1 - 50 10
51 - 75 25
76 - 90 105
91 - 100 125
101 - 110 145
111 - 130 165
131 - 150 205
151 - 170 515
171 - 190 830
191 - 225 1,240
226 - 255 1,760
Over 255 2,070

Standard rates which apply from 1 April 2018 for cars registered from 1 March 2001 to 31 March 2017

VED Band CO2 emissions Standard Rate*
  (g/km) £
A Up to 100 0
B 101 - 110 20
C 111 - 120 30
D 121 - 130 120
E 131 - 140 140
F 141 - 150 155
G 151 - 165 195
H 166 - 175 230
I 176 - 185 250
J 186 - 200 290
K** 201 - 225 315
L 226 - 255 540
M Over 255 555

*Standard rate is reduced by £10 for alternative fuel vehicles with CO2 emissions above 100 g/km.

**Includes cars emitting over 225 g/km that were registered before 23 March 2006.


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