EXPLANATORY NOTE
(This note is not part of the Order)
This Order amends sections 150(1), 155(1B) 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 that vehicle under section 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 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 £24,500 for the tax year 2020-21 and subsequent tax years. The cash equivalent of the benefit of fuel for a van is specified at in section 161(b) of the Act. Article 4 of this Order increases this figure to £666 for the tax year 2020-21 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 years 2015-16 to 2021-22 is calculated by applying the “appropriate percentage” (calculated by reference to the tax year and to section 155(1C) of the Act) to the figure in section 155(1B)(a) of the Act. 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 these figures to £3,490 for the tax year 2020-21 and subsequent tax years.
A Tax Information and Impact Note covering this instrument will be published on the website at www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.