Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN55 VAT: reform of VAT fuel scale charges

Who is likely to be affected?

1   Any businesses which recover input tax on fuel used for private motoring.

General description of the measure

2   This measure changes the basis of the existing Value Added Tax (VAT) private use charge from engine size to carbon dioxide (CO2) emissions. This change aligns the basis of the VAT private use charge with that for direct taxation, although in line with underlying VAT principles the charge still reflects expenditure on fuel used for private motoring.

Operative date

3   Businesses must use the new scales from the start of their next prescribed accounting period beginning on or after 1 May 2007.

Current law and proposed revisions

4   Section 2 of the Finance (No. 2) Act 2005, provided for amendments to Section 57 of the VAT Act 1994 to allow fuel scale charges to be calculated on the basis of carbon dioxide emissions. Under Section 2(7), that legislation comes into force only when activated by a Treasury Order.

5   This measure introduces a new table with detailed provisions which set out how private use charges should be calculated. The revised rates are:

VAT fuel scale charges for 12 month periods.

CO2 band VAT fuel scale charge, 12 month period,

£
VAT on 12 month charge,

£
VAT exclusive 12 month charge,

£
140 or below 730.00 108.72 621.28
145 780.00 116.17 663.83
150 830.00 123.62 706.38
155 880.00 131.06 748.94
160 925.00 137.77 787.23
165 975.00 145.21 829.79
170 1,025.00 152.66 872.34
175 1,075.00 160.11 914.89
180 1,120.00 166.81 953.19
185 1,170.00 174.26 995.74
190 1,220.00 181.70 1,038.30
195 1,270.00 189.15 1,080.85
200 1,315.00 195.85 1,119.15
205 1,365.00 203.30 1,161.70
210 1,415.00 210.74 1,204.26
215 1,465.00 218.19 1,246.81
220 1,510.00 224.89 1,285.11
225 1,560.00 232.34 1,327.66
230 1,610.00 239.79 1,370.21
235 1,660.00 247.23 1,412.77
240 or above 1,705.00 253.94 1,451.06

VAT fuel scale charges for 3 month periods

CO2 band VAT fuel scale charge, 3 month period,

£
VAT on 3 month charge,

£
VAT exclusive 3 month charge,

£
140 or below 182.00 27.11 154.89
145 195.00 29.04 165.96
150 207.00 30.83 176.17
155 219.00 32.62 186.38
160 231.00 34.40 196.60
165 243.00 36.19 206.81
170 256.00 38.13 217.87
175 268.00 39.91 228.09
180 280.00 41.70 238.30
185 292.00 43.49 248.51
190 304.00 45.28 258.72
195 317.00 47.21 269.79
200 329.00 49.00 280.00
205 341.00 50.79 290.21
210 353.00 52.57 300.43
215 365.00 54.36 310.64
220 378.00 56.30 321.70
225 390.00 58.09 331.91
230 402.00 59.87 342.13
235 414.00 61.66 352.34
240 or above 426.00 63.45 362.55

VAT fuel scale charges for 1 month periods

CO2 band VAT fuel scale charge, 1 month period,

£
VAT on 1 month charge,

£
VAT exclusive 1 month charge,

£
140 or below 60.00 8.94 51.06
145 65.00 9.68 55.32
150 69.00 10.28 58.72
155 73.00 10.87 62.13
160 77.00 11.47 65.53
165 81.00 12.06 68.94
170 85.00 12.66 72.34
175 89.00 13.26 75.74
180 93.00 13.85 79.15
185 97.00 14.45 82.55
190 101.00 15.04 85.96
195 105.00 15.64 89.36
200 109.00 16.23 92.77
205 113.00 16.83 96.17
210 117.00 17.43 99.57
215 121.00 18.02 102.98
220 126.00 18.77 107.23
225 130.00 19.36 110.64
230 134.00 19.96 114.04
235 138.00 20.55 117.45
240 or above 142.00 21.15 120.85

6   The scale charge for a particular vehicle is determined by its CO2 emissions figure. Where the CO2 emissions figure of a vehicle is not a multiple of 5, the figure is rounded down to the next multiple of 5 to determine the level of charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the 2 figures should be used. For cars which are too old to have a CO2 emissions figure HMRC have prescribed a level of emissions by reference to the vehicles engine capacity (cc).

Further advice

7   An update to notice 700/64 VAT: Motoring Expenses will be available from the National Advice Service including the revised figures in due course. If you have any questions about this change, please contact the National Advice Service on 0845 010 9000. A Regulatory Impact Assessment for this measure and information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk