Pre-Budget report: Company car fuel benefit charge to be increased

The figure on which the company car fuel benefit charge is based is to be increased from £14,400 to £16,900 from April 2008, in a bid to reduce the number of employers that encourage drivers to be frivolous with fuel.

The company car fuel benefit charge is the fee that both company car drivers and employers pay when free fuel for private miles is offered to drivers. The increase of the fixed figure on which the calculation is based will mean increased charges for both driver and employer.

Inez Anderson, tax director at Smith and Williamson, said: “This is an increase in fuel scale charge for anybody that is provided fuel for a company car. The increase will have a knock-on effect for employers in regards to National Insurance (NI).”

The pre-Budget report also announced that employee car ownership (ECO) schemes are not to be given a benefit-in-kind tax charge, however, Chancellor, Alistair Darling, failed to address the issue of authorised mileage allowances payments (AMAPs). It is expected that this will now be dealt with in next year’s Budget report.

“I was hoping there would be something related to the review on cars that would have bought some clarity for fleets that are waiting for this to make decisions going forward about their fleet. I personally think that it will be included in the Budget next year,” added Anderson.