EXPLANATORY NOTE
(This note is not part of the Order)
This Order amends sections 150(1), 155(1)(b) and 161(b) of the Income Tax (Earnings and Pensions) Act 2003 (“the Act”).
If a van is made available for an employee’s private use because of their employment, section 154 of the Act means that the benefit of the van is treated as earnings which are subject to tax. The amount of earnings is based on the “cash equivalent” of the benefit, which is fixed in section 155(1)(b) of the Act. Article 3 of this Order increases this amount to £3,150 with effect from the 2015-16 tax year. The cash equivalent is nil if the private use is insignificant or limited to ordinary commuting, or (in the tax years 2010-11 to 2014-15) if the van is incapable of producing CO2 emissions.
An employee who is liable to pay tax on a car or van under sections 120 or 154 of the Act is also liable to pay tax, under sections 149 and 160 of the Act, on the cash equivalent of the benefit of any fuel that they receive for the vehicle as a result of their employment.
Section 150 of the Act provides that the cash equivalent of car fuel is to be calculated by applying the “appropriate percentage” (which is normally based on the CO2 emissions of the car) to the figure set in section 150(1) of the Act. Article 2 of this Order increases this figure to £22,100 with effect from the 2015-16 tax year.
Section 161(b) of the Act sets the cash equivalent of van fuel. Article 4 of this Order increases this figure to £594 with effect from the 2015-16 tax year.
A Tax Information and Impact Note has not been prepared for this Instrument as it gives effect to previously announced policy.