| - The tax is levied on the fuel. There is no tax on | | | | the start point of the CO2 - based BIK scale to |
| fuel cards. | | | | 120g/km. Additionally, from the 5th April 2008, |
| - Fuel cards are an effective tool for controlling | | | | the basic rate of income tax will drop to 20% |
| CO2 and business mileage costs. | | | | from 22%. |
| - Fuel duty is due to increase by 2p per litre in | | | | In 2008-09, therefore, the higher rate taxpayer in |
| October, having been postponed in the 2008 | | | | the above example would pay £210 more tax |
| budget. | | | | on their private fuel benefit (or £277 if the car is |
| From 6th April 2008, HMRC will raise the nominal | | | | registered after 6th April). In 2007-08, a driver on |
| figure used for calculating benefit-in kind tax on | | | | the higher 40% income tax rate needed to cover |
| fuel provided for personal motoring from | | | | at least 12,140 personal miles to make the fuel |
| £14,400 to £16,900. This is the first time the | | | | perk worthwhile (based on the Mondeo's official |
| amount has been increased since its introduction in | | | | combined fuel consumption of 47mpg and |
| 2003. During this time, retail fuel prices have | | | | assuming the driver paid an average cost of |
| increased by 34%. Driver by driver assessments | | | | £1.03 per litre). The break-even point in the |
| Private fuel benefit liability has to be calculated on | | | | same car during the 2008-09 tax year will rise to |
| a driver-by-driver basis as each decision depends | | | | 13,100 miles (assuming that the price of diesel fuel |
| on the driver's annual private mileage, their | | | | averages £1.12 per litre). |
| marginal rate of tax, their car's CO2 emissions, its | | | | A new BIK band (10% for petrol and 13% for |
| actual fuel consumption, and, finally the price of | | | | diesel) will be introduced on April 6th for cars |
| fuel. | | | | emitting less than 120g/km of CO2. The band |
| Fuel prices are due to rise by 2p per litre in | | | | applies only to cars registered after 6th April |
| October 2008 when duty on petrol and diesel | | | | 2008. A driver of such a vehicle will pay |
| increases. If drivers prefer to give up private fuel | | | | substantially less tax on the free fuel benefit than |
| benefit, they can do so at any time during the | | | | a driver of an identical vehicle registered before |
| tax year, only having to pay BIK tax for the | | | | 6th April, despite the increase in the calculation |
| portion of the year in which they received the | | | | figure to £16,900. The employer would also |
| benefit. To ensure the effective management of | | | | save proportionally on National Insurance |
| fuel consumption and to support CO2 reporting, it | | | | contributions. |
| is essential that any driver opting out of the free | | | | In 2007-08, a driver on the higher 40% income |
| fuel benefit continues to use a fuel card. Used in | | | | tax rate, driving a BMW 118d, needed to cover at |
| conjunction with the Arval Mileage Capture | | | | least 13,906 personal miles to make the fuel |
| System, the fuel card is also the easiest and | | | | benefit worthwhile (based on the BMW's official |
| most cost effective way to manage business / | | | | combined fuel consumption of 62.8 mpg and |
| private mileage splits and reimbursement. | | | | assuming the driver paid an average cost of |
| Note that the percentage figure for calculating | | | | £1.03 per litre). The break-even point in the |
| company car BIK, which also applies to fuel | | | | same model registered during the 2008-09 tax |
| benefit, increases by 1% for vehicles registered | | | | year will fall to 10,839 miles (assuming that the |
| after 6th April 2008. This follows the lowering of | | | | price of diesel fuel averages £1.12 per litre). |