The EC has finally agreed the UK’s proposal
to align the output VAT charge with the benefit
in kind charge on the provision of private
fuel assessable on the individual. The proposals
and legislation were announced in the 2005
Budget and will be implemented from May 2007.
The output charge is payable by VAT registered
businesses which allow their employees to
claim all the fuel expenses on their company
cars and reclaim VAT on the full amount of
fuel purchased without making an adjustment
for the for private use. The output charge
is currently a maximum of £75.66 per
quarter and may rise significantly for those
cars which have the highest CO2 emissions.
We are still awaiting details of how the
legislation will work in practice and we
will keep you informed of developments.
Internet Links:
HMRC current rates
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