Income Tax: van benefit charge and fuel benefit charges for cars and vans from 6 April 2018
Published 22 November 2017
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This publication is available at https://www.gov.uk/government/publications/income-tax-van-benefit-charge-and-fuel-benefit-charges-for-cars-and-vans-from-6-april-2018/income-tax-van-benefit-charge-and-fuel-benefit-charges-for-cars-and-vans-from-6-april-2018
Who is likely to be affected
Employers and employees where employers provide employees with company vans available for private use, or fuel for private mileage in company cars and vans.
General description of the measure
This measure increases the van benefit charge and the car and van fuel benefit charges from 6 April 2018 by the increase in the September 2017 Retail Price Index (RPI). The flat-rate van benefit charge will increase to £3,350; the multiplier for the car fuel benefit charge will increase to £23,400; and the flat-rate van fuel benefit charge will increase to £633.
Policy objective
The measure ensures the tax system continues to support the sustainability of the public finances. Employers will be able to make the necessary changes to payroll systems and tax codes will be updated where appropriate, in advance of the 2018 to 2019 tax year. It also allows tax codes to be updated in advance of the relevant year where appropriate.
Background to the measure
The measure was announced at Autumn Budget 2017.
Detailed proposal
Operative date
The changes will have effect on and after 6 April 2018.
Current law
The Van Benefit and Car and Van Fuel Benefit Order 2016 (SI 2016/1174) set the van benefit charge at £3,230 for 2017 to 2018, the car fuel benefit multiplier at £22,600 and the van fuel benefit at £610.
Proposed revisions
Legislation will be introduced by statutory instrument to increase the cash equivalent of the van benefit charge and the fuel benefit charges.
The cash equivalent where a van is made available to an employee for private use will increase to £3,350 for 2018 to 2019. The value of the multiplier for calculating the cash equivalent of the fuel benefit for a car will increase to £23,400 for 2018 to 2019. The flat rate charge for the van fuel benefit will be increased to £633 for 2018 to 2019.
Summary of impacts
Exchequer impact (£m)
Van benefit Charge
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| - | negligible | +5 | +5 | +5 | +5 |
This costing has been certified by the Office for Budget Responsibility and will be included in their forecast at the next fiscal event.
Van fuel benefit Charge
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| - | negligible | negligible | negligible | negligible | negligible |
This measure is expected to have a negligible impact on the Exchequer.
Car fuel benefit charge
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
|---|---|---|---|---|---|
| - | nil | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will impact individuals who use a company van which is available for their private use and / or who are provided with fuel for their private use by their employer. As in previous years, these charges are being uprated by RPI and, in line with expectations, these individuals will pay more tax as a result of the increases.
This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be any adverse impacts on groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations. Businesses will need to update their systems to reflect the new figures for calculating the van benefit charge and the car and van fuel benefit charges. There are not expected to be any on-going costs.
Operational impact (£m) (HMRC or other)
The operational impact is negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
Regulations relating to the van benefit charge and the car and van fuel benefit charges are normally reviewed on an annual basis.
Further advice
If you have any questions about this change, please contact the Employment Income Policy Team by email employmentincome.policy@hmrc.gsi.gov.uk