EIM23615 - Car benefit: Emergency vehicles: charge to tax: disregard for fuel
Section 205 ITEPA 2003
Treatment of the expense of fuel provided from the 2017/18 tax year onwards
Where the asset is an emergency vehicle, the expense of providing fuel for it in a tax year is to be disregarded as an expense so long as the fuel provided or cost reimbursed is for business use only and is not used for the employee’s private use or, the employee has made good the expense of all private fuel on or before 6 July following the tax year. See EIM21885.
Example:
An employee in the emergency services is provided with an unmarked emergency vehicle on 6 April 2017 that is available for private use throughout the tax year and is also provided with a fuel card for the vehicle. However, the conditions under which the vehicle is provided require the employee to make good, on or before 6 July in the following tax year, any fuel cost attributable to the employee’s private mileage.
The vehicle has a market value when first provided of £26,705. The employee’s total mileage during the year is 3,576, of which 2,169 represents business mileage. Running costs borne by the employer are £1,029, of which £429 relates to fuel and £600 for insurance. The employees makes good, before 6 July 2018, £169 for the private fuel used. The employee makes a monthly contribution of £100 per month from net pay.
The employee’s taxable contribution is worked out as follows:
| £ | |
|---|---|
| 20% of market value | 5,341 |
| Running costs: Fuel; and | 429 |
| Insurance | 600 |
| Total cost | 6,370 |
| Less: Fuel cost as the employee made good private fuel | 429 |
| Revised total | 5,941 |
| Less: Costs attributable to business use | 3,603 |
| £5,941 x (2,169/3,576) (business miles / total miles) | |
| Interim value of taxable benefit | 2,338 |
| (£5,941 - £3,603) | |
| Less: Contributions made by employee for private use | 1,200 |
| Net taxable benefit | 1,138 |
If the employee does not make good the private fuel element of the total fuel cost within the prescribed time limit, the total fuel cost must be included within the calculation of the taxable benefit.
The business mileage to total mileage ratio basis of the calculation used in the example above may be applied up to and including the 2019/20 tax year as part of a transitional arrangement. From 6 April 2020 onwards the normal rules for the valuation of assets made available for private use must be used (see EIM21885 onwards).
If the employee’s private mileage relates only to –
· ordinary commuting, on-call commuting, private journeys made while on call; and
· the primary reason the employee has use of the emergency vehicle is because they need it for business travel in the normal course of their job,
the exemption under section 248A ITEPA 2003 may still apply, subject to all the conditions under the exemption being met, and so no taxable benefit will be reportable. See EIM23600.