BN55 - VAT: Reform of VAT Fuel Scale Charges
Who is likely to be affected?
1. Any businesses which recover input tax on fuel used for private motoring.
General description of the measure
2. This measure changes the basis of the existing Value Added Tax (VAT) private use charge from engine size to carbon dioxide (CO2) emissions. This change aligns the basis of the VAT private use charge with that for direct taxation, although in line with underlying VAT principles the charge still reflects expenditure on fuel used for private motoring.
Operative date
5. Businesses must use the new scales from the start of their next prescribed accounting period beginning on or after 1 May 2007.
Current law and proposed revisions
6. Section 2 of the Finance (No. 2) Act 2005, provided for amendments to Section 57 of the VAT Act 1994 to allow fuel scale charges to be calculated on the basis of carbon dioxide emissions. Under Section 2(7), that legislation comes into force only when activated by a Treasury Order.
7. This measure introduces a new table with detailed provisions which set out how private use charges should be calculated. The revised rates are:
| CO2 band | VAT fuel scale charge, 12 month period, £ | VAT on 12 month charge, £ | VAT exclusive 12 month charge, £ |
|---|---|---|---|
| 140 or below |
730.00 | 108.72 | 621.28 |
| 145 |
780.00 | 116.17 | 663.83 |
| 150 |
830.00 | 123.62 | 706.38 |
| 155 |
880.00 | 131.06 | 748.94 |
| 160 |
925.00 | 137.77 | 787.23 |
| 165 |
975.00 | 145.21 | 829.79 |
| 170 |
1,025.00 | 152.66 | 872.34 |
| 175 |
1,075.00 | 160.11 | 914.89 |
| 180 |
1,120.00 | 166.81 | 953.19 |
| 185 | 1,170.00 | 174.26 | 995.74 |
| 190 | 1,220.00 | 181.70 | 1,038.30 |
| 195 |
1,270.00 | 189.15 | 1,080.85 |
| 200 | 1,315.00 | 195.85 | 1,119.15 |
| 205 |
1,365.00 | 203.30 | 1,161.70 |
| 210 | 1,415.00 | 210.74 | 1,204.26 |
| 215 | 1,465.00 | 218.19 | 1,246.81 |
| 215 | 1,465.00 | 218.19 | 1,246.81 |
| 220 | 1,510.00 | 224.89 | 1,285.11 |
| 225 | 1,560.00 | 232.34 | 1,327.66 |
| 230 | 1,610.00 | 239.79 | 1,370.21 |
| 235 | 1,660.00 | 247.23 | 1,412.77 |
| 240 or above |
1,705.00 | 253.94 | 1,451.06 |
| CO2 band | VAT fuel scale charge, 3 month period, £ | VAT on 3 month charge, £ | VAT exclusive 3 month charge, £ |
|---|---|---|---|
| 140 or below |
182.00 | 27.11 | 154.89 |
| 145 | 195.00 | 29.04 | 165.96 |
| 150 | 207.00 | 30.83 | 176.17 |
| 155 | 219.00 | 32.62 | 186.38 |
| 160 | 231.00 | 34.40 | 196.60 |
| 165 | 243.00 | 36.19 | 206.81 |
| 170 | 256.00 | 38.13 | 217.87 |
| 175 | 268.00 | 39.91 | 228.09 |
| 180 | 280.00 | 41.70 | 238.30 |
| 185 | 292.00 | 43.49 | 248.51 |
| 190 | 304.00 | 45.28 | 258.72 |
| 195 | 317.00 | 47.21 | 269.79 |
| 200 | 329.00 | 49.00 | 280.00 |
| 205 | 341.00 | 50.79 | 290.21 |
| 210 | 353.00 | 52.57 | 300.43 |
| 215 | 365.00 | 54.36 | 310.64 |
| 220 | 378.00 | 56.30 | 321.70 |
| 225 | 390.00 | 58.09 | 331.91 |
| 230 | 402.00 | 59.87 | 342.13 |
| 235 | 414.00 | 61.66 | 352.34 |
| 240 or above | 426.00 | 63.45 | 362.55 |
| CO2 band | VAT fuel scale charge, 1 month period, £ | VAT on 1 month charge, £ | VAT exclusive 1 month charge, £ |
|---|---|---|---|
| 140 or below |
60.00 | 8.94 | 51.06 |
| 145 | 65.00 | 9.68 | 55.32 |
| 150 | 69.00 | 10.28 | 58.72 |
| 155 | 73.00 | 10.87 | 62.13 |
| 160 | 77.00 | 11.47 | 65.53 |
| 165 | 81.00 | 12.06 | 68.94 |
| 170 |
85.00 | 12.66 | 72.34 |
| 175 | 89.00 | 13.26 | 75.74 |
| 180 | 93.00 | 13.85 | 79.15 |
| 185 | 97.00 | 14.45 | 82.55 |
| 190 | 101.00 | 15.04 | 85.96 |
| 195 | 105.00 | 15.64 | 89.36 |
| 200 |
109.00 | 16.23 | 92.77 |
| 205 | 113.00 | 16.83 | 96.17 |
| 210 | 117.00 | 17.43 | 99.57 |
| 215 | 121.00 | 18.02 | 102.98 |
| 220 | 126.00 | 18.77 | 107.23 |
| 225 |
130.00 | 19.36 | 110.64 |
| 230 | 134.00 | 19.96 | 114.04 |
| 235 | 138.00 | 20.55 | 117.45 |
| 240 or above | 142.00 | 21.15 | 120.85 |
8. The scale charge for a particular vehicle is determined by its CO2 emissions figure. Where the CO2 emissions figure of a vehicle is not a multiple of 5, the figure is rounded down to the next multiple of 5 to determine the level of charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the 2 figures should be used. For cars which are too old to have a CO2 emissions figure HMRC have prescribed a level of emissions by reference to the vehicles engine capacity (cc).
Further advice
9. An update to notice 700/64 VAT: Motoring Expenses will be available from the National Advice Service including the revised figures in due course. If you have any questions about this change, please contact the National Advice Service on 0845 010 9000.
