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HMRC internal manual

Employment Income Manual

Van fuel benefit from 2005/06: if fuel withdrawn and not reinstated

Section 163 ITEPA 2003

The van fuel benefit charge is incurred as detailed at EIM22900; there is an example at EIM22980.

Reduction if fuel withdrawn and not reinstated in the same tax year

Under Section 163(3) and (4) ITEPA 2003 the charge is proportionately reduced if for any part of a tax year:

  • the facility for the provision of fuel as mentioned in Section 160(1) ITEPA 2003 is not available (i.e. there is no provision of any fuel for any purpose), or
  • the fuel is made available only for business travel, or
  • the employee is required to make good to the person providing the fuel the whole of the expense incurred by that person in connection with the provision of the fuel for the employee’s private use and the employee does make good that expense. From the 2017/18 tax year the latest date for making good the cost of all fuel provided for privae use when calculating the van fuel benefit charge is by 6 July following the tax year in which the private fuel is provided.

The fact that any of the conditions above is met for part of a year shall be disregarded if there is a time later in that year when none of those conditions is met. In other words, there is no reduction if fuel is withdrawn but is reinstated later in the same tax year for the same van. It does not matter that fuel may still be provided for a different van because this legislation operates on a van-by-van basis. Facts concerning Van 1 have no effect on liabilities in connection with Van 2. Fuel can be withdrawn:

  • by the employer no longer providing free fuel for private use, or
  • by the employer requiring the employee to make good the cost of all private fuel provided after a set date and by the employee doing so (see EIM22945).

Note that there is no apportionment for days before provision of free fuel commenced.

The reduced amount is calculated according to the formula at EIM22925.

Other possible adjustments to the charge

The van benefit charge is also subject to adjustment as follows:

  • see EIM22925 if the van is unavailable for part of the year
  • see EIM22935 if the van is shared
  • see EIM22940 for the effect of replacement vans.

2005/06 and 2006/07

Because the van fuel benefit charge is nil for these two years, its existence can effectively be ignored until 2007/08.