Company drivers face tax hike

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New rules on private fuel benefit came into force today that could cost company drivers more than £300 a year in extra tax.

The tax company drivers pay for their private fuel use will now be based on the carbon dioxide emissions of their car rather than engine size, and could increase bills by up to £336 a year. Motorists running a car with an engine over 2.0 litres in size and with CO2 emissions of more than 255g/km are the most likely to see their tax bills increase.

Every company motorist should use the rule change as an opportunity to reappraise the value of the ‘free’ private fuel they are offered by their companies, said the AA.

‘People often think that they will automatically be better off if they get free fuel, but they may find that their choice of car and the number of private miles they do produce a counter effect and they are overtaxed,’ said the AA’s Chris Patience.

What Car? editor Rob Aherne said: ‘It only takes two minutes to check, but it could save you hundreds of pounds a year.’

First multiply the nominal £14,400 car value used for all fuel calculations by the percentage tax liability of your car, which you can find out using the Whatcar.com road tests. Then multiply this figure by your income tax level to see how much you will pay each year for receiving fuel for private use.

Then divide this figure by the price of a gallon of petrol or diesel to see how much fuel it would buy in a year. Finally multiply this by the fuel consumption of your car to reveal how many private miles you need to be doing to make paying the tax worthwhile.