Is It Time To Ditch Your Fuel Charge Benefit?
The car benefit charge multiplier increased from £21,700 to £22,100 on 6 April 2015 and, with effect from 6 April 2016, will increase again in line with the retail prices index. The equivalent benefit for vans is £594 and, again, will increase in line with the retail prices index.
This means, for example, if your company car has CO2 emissions between 120-124 you will incur a fuel benefit charge of £3,990 for a petrol car (£22,100 x 19%) or £4,862 for a diesel car (£22,100 X 22%)
For a higher rate taxpayer the cost in terms of extra tax is either £1,596 or £1,945 respectively. As the multiplier is to increase, so will the benefit. The higher the Co2 emissions for the car, the higher the benefit, so for a car with emissions between 140-144 the benefit increases to £5,083 and £5,746, or extra higher rate tax of £2,033 and £2,298.
If the amount you would spend on private fuel is below the tax you pay on the benefit then it is time to have a rethink on how you claim the fuel you use for business purposes and so avoid any benefit.
Green & Co can offer advice to ensure that the most tax advantageous method is implemented. Please contact us for further information.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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