Policy paper

Personal Tax: van benefit charge and the car and van fuel benefit charges

Published 23 December 2016

Who is likely to be affected

Businesses and employers that provide company vans, free fuel for cars and vans for private journeys, and employees in receipt of these benefits.

General description of the measure

This measure increases the van benefit charge and the car and van fuel benefit charges for 2017 to 2018. The van benefit charge will increase to £3,230; the car fuel benefit charge will increase to £22,600; and, the van fuel benefit charge increases to £610.

Policy objective

The measure will create certainty for employers and employees as the uprating figures for the van benefit charge and the car and van fuel benefit charges are published ahead of the following tax year, and ensures the tax system continues to support the sustainability of the public finances.

Detailed proposal

Operative date

The changes will have effect from 6 April 2017.

Current law

The Van Benefit and Car and Van Fuel Benefit Order 2015 set the van benefit charge at £3,170 for 2016 to 2017, the car fuel benefit at £22,200 and the van fuel benefit at £598.

Proposed revisions

Legislation will be introduced by an Order to set the cash equivalent of the use of a van made available to an employee for private use that is more than insignificant at £3,230 for 2017 to 2018. For vans that do not emit CO2 when driven, the cash equivalent is calculated based on the tapered appropriate percentage rate, which is 20% for 2017 to 2018. The value of the multipliers for calculating the cash equivalent of the fuel benefit for a car is set at £22,600 for 2017 to 2018 and for vans it is set at £610 for 2017 to 2018.

Summary of impacts

Exchequer impact (£m)

2016 to 2017 2017 to 2018 2018 to 2019 2019 to 2020 2020 to 2021 2021 to 2022
- negligible negligible negligible negligible negligible

This measure is expected to have a negligible impact on the Exchequer.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

This measure is not expected to impact on family formation, stability or breakdown. The change is also not expected to have any significant impacts on individuals.

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) (HM Revenue and Customs 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 Employment Income Policy Team by email employmentincome.policy@hmrc.gsi.gov.uk.