Budget Notes

BN70 EMPLOYER PROVIDED VANS: FUEL BENEFIT RULES

Who is likely to be affected?

1. Employees provided with a company van available for their private use, who purchase fuel for business travel which is then reimbursed or otherwise paid for by their employer. Employers who bear Class 1A National Insurance on the taxable benefit of providing a van and the fuel for it purchased by the employee.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to ensure that reimbursement of private fuel cost is not treated as earnings for tax purposes and that the same rules have effect for the provision of van fuel for private use as those that currently have effect for company car fuel.

Operative date

3. This measure will have effect on and after the date that Finance Bill 2008 receives Royal Assent.

Current law and proposed revisions

4. Section 239(3) of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA) signposts that section 239(1) and (2) of ITEPA do not prevent a charge to tax arising under section 149 of ITEPA in relation to company car fuel benefit. To ensure consistency the amendment expands the signpost to cover van fuel benefit (section 160 of ITEPA).

5. A further minor change to section 269 of ITEPA will ensure that the signposting provided by the section covers van fuel as well as car fuel.

Further advice

6. If you have any questions about this change, please contact Elizabeth O'Donnell on 020 7147 2502, email: elizabeth.j.o'donnell@hmrc.gsi.gov.uk Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk