Fleet News

Free fuel comes into Chancellor's firing line

THE Government is determined to crack down on the benefit enjoyed by company car drivers who receive free fuel for private mileage. An official Treasury bulletin said: 'The Chancellor's intention is to discourage employers from providing and employees from accepting free fuel.

'More company car drivers will face the full cost of the fuel they use for private motoring. This should result in fewer private miles being driven and lower carbon dioxide emissions.'

The taxable benefit of fuel for private use is calculated separately from the tax on company cars, and is based on fixed Fuel Scale Charges, depending on the engine size of their company car. The Chancellor has announced that these charges will rise by 20% every year for the next four years, over and above the usual increases in pump prices (including fuel duty).

In real terms this will equate to a rise of 30% year on year, enough to tax the full cost of free fuel at the equivalent pump price - the fuel scale charge for cars with engines over 2,000cc will rise to almost £5,000 in four years.

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