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Inflation sees hike in vehicle-related benefit charges

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Inflation sees hike in vehicle-related benefit charges!

Certain benefits, including those related to company-owned vehicles, are revised annually to reflect inflation. The relevant figures for 2023/24 have just been confirmed…

What do you need to know?

The consumer price index is the benchmark the government uses to measure inflation. This is linked to several key figures for the purposes of calculating the cash equivalent to establish the taxable benefits in kind. Three of these figures relate to company-owned vehicles where there is some element of private usage.

Firstly, there is a fuel benefit where an employer provides petrol or diesel to an employee that is used for private journeys. There is no de minimis, so a small amount of fuel provided and not reimbursed by the employee is enough to trigger the benefit. The cash equivalent is worked out by multiplying the appropriate percentage for the car by a fixed fuel benefit multiplier. For 2022/23 this is £25,300, but due to high inflation this will increase to £27,800 from April 2023. A jump of £2,500.00!

Next, there is the company van benefit. This is a fixed amount, i.e. there is no variance depending on the van’s emissions level. If the van is used for private journeys, and this usage is not “insignificant”, the employee will be taxed on a fixed cash equivalent. For 2022/23 this is £3,600, and will increase to £3,960 from April 2023.

Finally, if fuel provided by the employer is used for private journeys, the employer will be taxed on a fixed cash equivalent of £688 for 2022/23, rising to £757 from April 2023.

We are also currently running a promotion until 1st January 2023.

£225 + VAT for a basic Self-Assessment Tax Return (usually £299 + VAT)

Offer is valid until 01.12.2022.

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The Team at London Accountants

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