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BN
36 - Company Car and Fuel Benefit Tax
Who is likely to be affected?
- Employees provided with a car that is available
for their private use and free private fuel where
provided; and employers who bear Class 1A National
Insurance contributions on the taxable benefit
of a provided car
and fuel.
General description of the measure
- The measure:
- sets the company car fuel figure for 2006/07
- sets the company car tax charge for 2008/09
and
- introduces, from 2008/09, a new 10% appropriate
percentage rate for company cars with CO2 emissions
of 120g/km or below.
Operative date
- 6 April 2006 – company car
fuel multiplier.
6 April 2008 – company car tax.
Current law and proposed revisions
Company car fuel benefit tax
- An additional taxable benefit arises
from section 149 of the Income Tax (Earnings and
Pensions) Act (ITEPA) 2003 if the employee receives
free fuel for the company car for their private
use. The company car fuel benefit tax charge was
reformed in April 2003 to align with the environmental
principles of the company car tax system. Since
April 2003, the fuel benefit charge has been calculated
by applying the company car tax appropriate percentage
to a set figure known as the multiplier. In 2005/06
the multiplier was £14,400.
- 5. For 2006/07, the multiplier figure for the
company car fuel benefit tax charge will be frozen
at £14,400.
