In a Written statement in the House of Commons, Jess Norman, Financial Secretary to the Treasury, announced that the Van Benefit and Car and Van Fuel Benefit Order 2020 was laid on 02 March 2020. This comes into force on 06 April 2020 for the tax year 2020/21 and amends the following legislation:
- For car fuel – section 150(1) of the Income Tax (Earnings and Pensions) Act 2003
- For the van benefit – section 155(1B)(a) and (b) of the Income Tax (Earnings and Pensions) Act 2003
- For van fuel – section 161(b) of the Income Tax (Earnings and Pensions) Act 2003
As announced at Budget 2018, from 6 April 2019 fuel benefit charges will increase in line with Retail Prices Index (RPI) inflation and the van benefit charge will increase in line with Consumer Prices Index (CPI) inflation.
From 06 April 2020, the above increased by the value of the RPI at September 2019. The table below shows these compared to the value that applied in 2019/20:
|Car Fuel Benefit Charge Multiplier||24,100||24,500|
The cash equivalent is normally calculated by reference to the CO2 emissions of the car.
From 06 April 2020, the Van Benefit Charge increases by the value of the CPI as at September 2019. The Van Fuel Benefit Charge increases by the value of the RPI at September 2019. The table below shows the 2020/21 values compared with those for 2019/20:
|Van Benefit Charge||3,430||3,490|
|Van Fuel Benefit Charge||655||666|
The van charges apply when the vehicle is available for unrestricted personal use.
Section 155 of ITEPA states that the Van Benefit Charge (VBC) exemption for zero emission vans is to be phased out on a tapered basis up to April 2022. The tapered VBC rate was 60% for 2019/20 and increases to 80% for 2020/21.
The impact of the tapering is that drivers of zero CO2-emitting company vans (where the private use is significant) will see a percentage of the main VBC as 80% for tax year 2020/21.