It is normal for HMRC to notify employees and employers of the following tax years’ charges for benefits in kind immediately after the Chancellor has delivered his Budget. However with the Budget not taking place until 12th March 2020, the First Secretary to the Treasury has issued an early release which has highlighted some key changes to car fuel, van and van fuel benefits.
From 6th April 2020 the figures will increase as follows:
Van Benefit Charge increases from £3430 to £3490.
Car Fuel Benefit Charge multiplier increases from £24100 to £24500.
Van Fuel Benefit charge increases from £655 to £666.
When do car benefits apply?
A car benefit applies if a car is made available to an employee for private use. A car fuel benefit applies if fuel is provided for private travel. It should be borne in mind that the fuel benefit is an all or nothing charge so even if only £1 of fuel is provided by an employer for the private use of an employee, the whole fuel benefit applies.
If employees want to avoid a fuel benefit it is recommended that when business journeys are under taken, the employee provides fuel personally and claims the business mileage back from the employer. For a fuel benefit to be of value to a basic rate taxpayer, private travel would need to be around 17000 miles per annum.
When do van benefits apply?
When it comes to company vehicles there are slightly relaxed rules for applying a van benefit. HMRC will still apply a van benefit charge if the van is used privately, however the legislation does allow home to work travel, which is ordinarily (and in the case of a car) treated as private travel. If however there is private travel over and above home to work, a benefit in kind will apply.
A van fuel benefit charge will apply if the van benefit applies (there is private use of the van, and all fuel is provided by the employer.)
Zero/Low Emission Vans
Zero or low emission vans are becoming more common and the van benefit amount is different for these vehicles compared with a regular van. For an employee provided with a zero emission van in 2020/2021, the van benefit will be reduced to £2792.
More Recent Changes for Company Cars
In other news, HMRC recently changed the reporting requirements for ultra-low emission and diesel supplement company cars. To learn more about the changes and see how they apply to your business you can read our Head of Legislation & Compliance Paul Chappell’s run down on the changes “Ultra Low Emission Vehicles and Diesel Supplement Company Cars – HMRC reporting requirements.”