Tax year 2023/2024: Car and van fuel benefit charge increased

HM Revenue and Customs have confirmed the decision to increase the Expenses and Benefits rates for tax year 2023/2024, effective from 6th April 2023.

Van benefit and fuel benefit for cars and vans

Van benefit charge and fuel benefit charges for cars and vans are to be uprated by the Consumer Price Index (with rounding) from 6th April 2023.

The uprate will take effect as follows:

• Van Benefit Charge will uprate from £3,600 to £3,960 – this reflects an 11% rise.
• Car Fuel Benefit Charge multiplier will uprate from £25,300 to £27,800 – this reflects a 9.89% rise
• Van Fuel Benefit Charge will uprate from £688 to £757 – this reflects a rise of 10.03%.

The Van Benefit Charge applies when an employee is provided with a company van and it is used for personal journeys. The Van Fuel Benefit Charge applies where fuel is provided by the employer to cover private use.

A director or employee who is provided with a Company Car and receives any free petrol or diesel from their employer for private use is taxed based on the Car Fuel Benefit Charge and the cars CO2 benefit charge percentage.

There is no fuel benefit charge in relation to electric vehicles.

Autumn Statement 2022 – and company cars

On 17th November 2022 as part of the Autumn Statement, the Chancellor also announced that:

• Finance Bill 2022 will include legislation to set the company car tax rates to April 2028.
• Percentages for electric and ultra-low emission cars emitting less than 75g of CO₂ per kilometre will increase by 1% in 2025-26, 2026-27 and 2027-28. (This will bring rates to a maximum of 5% for electric cars and 21% for ultra-low emission cars).
• Rates for all other vehicle bands will be increased by 1% for 2025-26 up to a maximum percentage of 37%. (Rates will then be fixed for 2026-27 and 2027-28).

Opinion

With high inflation and the CPI rates (with rounding also being applied) will see significant cost rises impacting individuals with the provision of cars and vans that are available for private use. These rises are likely to be higher than the individuals rise in pay in many cases.

This increases will also impact the employers Class 1A liability at 13.8% required to be covered on the P11Db.

PAYadvice.UK 2/12/2022