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 2017/18 is £22,600.

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 £3,230. There is a further £610 taxable benefit if the employer provides fuel for private travel.

Van and fuel charge Van £ Fuel £ Total £
Tax (20% taxpayer) 646 122 768
Tax (40% taxpayer) 1,292 244 1,536
Tax (45% taxpayer) 1,453.50 274.50 1,728
Employer's Class 1A NICs 445.74 84.18 529.92

The benefit charge for zero emission vans for 2017/18 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 rates from 1 March 2017 are shown in the table below.

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 for 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.

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 14p 9p 9p
1601 – 2000cc 14p 11p 9p
Over 2000cc 22p 13p 14p
CO2 emissions (g/km) Appropriate percentage
Petrol % Diesel %
0 – 50 9 12
51– 75 13 16
76 – 94 17 20
95 – 99 18 21
100 – 104 19 22
105 – 109 20 23
110 – 114 21 24
115 – 119 22 25
120 – 124 23 26
125 – 129 24 27
130 – 134 25 28
135 – 139 26 29
140 – 144 27 30
145 – 149 28 31
150 – 154 29 32
155 – 159 30 33
160 – 164 31 34
165 – 169 32 35
170 – 174 33 36
175 – 179 34 37
180 – 184 35
185 – 189 36
190 and above 37

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 for cars first registered on or after 1 April 2017

A new VED system will apply to the taxation of most passenger vehicles registered on or after 1 April 2017. For the first year this is based on CO2 emissions as set out in the table below.

For following years all vehicles with zero emissions will be exempt from the standard rate of vehicle tax, 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 – 150 10
51 – 75 25
76 – 90 100
91 – 100 120
101 – 110 140
111 – 130 160
131 – 150 200
151 – 170 500
171 – 190 800
191 – 225 1,200
226 – 255 1,700
Over 255 2,000

Standard rates which apply from 1 April 2017 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 – 130 115
E 131 – 140 135
F 141 – 150 150
G 151 – 165 190
H 166 – 175 220
I 176 – 185 240
J 186 – 200 280
K** 201 – 225 305
L 226 – 255 520
M Over 255 535

*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.

HGV VED rates

The government announced that it will freeze rates of VED for HGVs in 2017/18, which includes all rates linked to the basic goods rate.