It was announced in the 2022 Autumn budget that the flat rate van benefit charge, flat rate van fuel benefit charge and car fuel benefit multiplier will increase from April 2023 in line with the September 2022 Consumer Price Index (CPI).
Van benefit charge
A van benefit charge will arise if an employee’s private use of the van is not restricted, and the employee has been provided with a van which has carbon emissions.
A van benefit charge can be avoided only where the ‘restricted private use’ conditions are met – the ‘commuter use requirement’ and the ‘business travel requirement’. The commuter use requirement is met where private use is restricted to ordinary commuting journeys only (i.e., normal home-to-work travel) for both the employee and their family. The business travel requirement is met if the van has been provided to the employee mainly for business use. If these conditions are met, the van benefit charge does not apply.
The charge for an electric van is nil. Opposed to those with carbon emissions, employees with electric vans can use their company van for unrestricted private use without any associated tax charge, meaning the provision of an electric van is a tax-free benefit for the employee.
Where the employee has unrestricted private use and the van is not electric, the charge is a fixed amount which is set each year. The flat rate van benefit charge for 2023/24 is set to increase from £3,600 to £3,960. This rise will translate to a UK basic rate taxpayer paying £792 (£72 more per year), whilst a UK higher rate taxpayer will pay £1,584 (£144 more per year).
Van fuel charge
Where a van charge arises and the employer also meets the cost of the fuel for private travel, a separate van fuel charge will apply. The flat rate van fuel benefit charge for 2023/24 is set to increase from £688 to £757. This rise will translate to a UK basic rate taxpayer paying £151.40 (£13.80 more per year), whilst a UK higher rate taxpayer will pay £302.80 (£27.60 more per year).
Where the restricted private use requirement is met and if the fuel is provided for ordinary commuting journeys, there is no fuel charge. There is also no fuel charge if the employer meets the cost of electricity for private travel in an electric van.
Car fuel charge
The car fuel benefit multiplier will increase from £25,300 to 27,800 from April 2023.
If you require any assistance with regard to the reporting of car or van benefits, bearing in mind the 6 July deadline, please contact us.
