(This note is not part of the Order)
This Order amends sections 150(1), 155(1B)(b), and 161(b) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (“the Act”).
Where an employee receives fuel for a car or van as a result of their employment and they are chargeable to tax in respect of the vehicle under sections 120 or 154 of the Act, the cash equivalent of the benefit of that fuel is treated as earnings under sections 149 and 160 of the Act.
The cash equivalent of the benefit of the fuel for a car is normally calculated by applying the “appropriate percentage” (usually calculated by reference to the CO2 emissions of the car) to the figure in section 150(1) of the Act. Article 2 of this Order increases this figure to £27,800 for the tax year 2023-24 and subsequent tax years. The cash equivalent of the benefit of fuel for a van is set out in section 161(b) of the Act. Article 4 of this Order increases this figure to £757 for the tax year 2023-24 and subsequent tax years.
Where a van is made available by reason of the employment to an employee for private use that is more than insignificant and not limited to ordinary commuting, section 154 of the Act treats the cash equivalent of the benefit of the van as earnings. For vans that cannot in any circumstances emit CO2 by being driven, the cash equivalent of the benefit for the tax year 2021-22 or a subsequent tax year is nil. For other vans, the cash equivalent of the benefit is set out in section 155(1B)(b) of the Act. Article 3 of this Order increases the figure to £3,960 for the tax year 2023-24 and subsequent tax years.
A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.