Advisory Fuel Rates (AFR) - if you have a petrol-hybrid car, you can use AFR petrol rates; if you have a diesel-hybrid car, you can use AFR diesel rates. There is no AFR equivalent for battery electric vehicles. Enhanced Capital Allowances (ECAs) - businesses that purchase cars which emit less than 75g CO2/km, zero emission goods vehicles, or ULEV recharging or refuelling infrastructure, are eligible for 100% first Approved Mileage Allowance Payment (AMAPs) - electric and hybrid cars are treated in the same way as petrol and Mileage Allowance Relief (MAR) - electric and hybrid cars are treated in the same way as petrol and diesel cars. A) Taxes applicable to all ULEV users 1.1 Fuel duty is paid on each litre of road fuel purchased (or on each kilogram in the case of gases). Fuel duty is levied on any combustible fuels released onto the UK market, but not on electricity, therefore battery electric vehicles do not pay fuel duty. Hydrogen used in a fuel cell is also exempt, although hydrogen used in an internal combustion engine Petrol, diesel, biodiesel (for 2.1 VED is a tax applicable to all vehicles driving on UK roads. For cars first registered on or after 1 March 2001 the rate is based upon the car's CO2

emissions, with one rate payable in the first year (FYR), and then a 2.2 Zero emission vehicles are exempt from paying VED. All cars registered before 1 April 2017 that emit less than 100g CO2/km have a zero rate of VED. Cars that are not solely powered by petrol/diesel (including hybrids) are classified as alternative fuel vehicles and receive a £10 discount. 2.3 For cars first registered from 1 April 2017 onwards, a new VED regime applies. The FYR retains a link to the vehicle's CO2 emissions. A flat SR of £140 applies in all subsequent years, except for zero emission cars for which the SR will be £0. The rates for cars registered between 1 April 2.4 From 1 April 2018, the FYR has increased for cars emitting more than 75g CO2/km. At the same time, a higher rate for diesel vehicles has been 1 Full VED rates set out

2.5 All cars (including zero emission cars) with a list price above £40,000 also attract a supplement of £310 in addition to the SR for the first 5 years in which the SR is paid. The government announced at Autumn Budget 2017 that zero-emission capable taxis will be exempted from this 2.6 A £10 discount for alternative fuel vehicles (including hybrids) applies to the FYRs and SRs listed in tables 3 and 4. 2.7 All cars first registered before 1 April 2017 remain in the previous VED First Year Rate (£) Standard Rate (£)* * cars costing over £40,000 pay additional £310 supplement for first 5 years

First Year Rate (£) First Year Rate for * cars costing over £40,000 pay additional £310 supplement for the first 5 years in which a standard rate is paid. 3. Value Added Tax (VAT) 3.1 VAT is a consumption tax that applies to the price of vehicles, their fuels and electricity. Vehicles are subject to the standard rate of VAT (20%) regardless of their CO2 emissions. 3.2 Motorists are able to receive a grant towards the cost of a qualifying ULEV, through the Plug-in Car Grant and Plug-in Van Grant. This is a payment against the full purchase price of the basic vehicle including number plates, vehicle excise duty, and VAT, but excluding any optional extras, delivery charges and first registration fee. The grant payment is applied on the customer invoice below the VAT line.2 3.3 Alongside petrol and diesel, hydrogen used as fuel attracts the standard 2 Since March 1 2016, two grant rates are available under the Plug in Car ‘Category 1’ cars receive a grant of £4,500; ‘Category 2 and 3’ cars receive £2,500. More information on the Plug-in Car and Van Grants can be found at

3.4 Electricity has varying VAT treatment. Electricity that is supplied for domestic, non-business and charity use attracts reduced rate (5%) VAT, while electricity that is supplied for business use is subject to standard 3.5 Electricity that is used to recharge an electric vehicle at home therefore attracts the reduced rate of VAT (5%). Electric vehicles that are recharged at work will attract 20% VAT on the electricity used. B) Taxes that are applicable to business users only 4. Taxation of company cars (CCT) 4.1 The provision of a company car that is available for the employee's private use is treated as a benefit in kind (BIK).3 This is known as company car tax (or car benefit charge). As such, it is subject to Income Tax (for the employee) and employer Class 1A National Insurance 4.2 The benefit is valued as an ‘appropriate percentage’ of the car’s total list price (manufacturer’s list price when new plus any accessories - the value reportable on a P11D form). The appropriate percentage is 4.3 There is currently a 4 point supplement for diesel cars which is added to the appropriate percentage. However, cars that meet the RDE2 standard (also known as "Euro 6d" standard) will be exempt from the diesel 4.4 A calculator is available at and rates for 3 Employees may receive non-cash benefits from their employer. These are called benefits in kind, and

4.5 Above 75g CO2/km, the appropriate percentage continues to increase by 1 percentage point for each increase of 5g CO2/km, to a maximum of 4.6 For plug-in hybrid or battery electric company cars, the list price of the vehicle must always include the cost of the battery, whether or not it is leased separately. If an employer leases a battery for an employee’s company car, there is a taxable benefit, which would normally be based 4.7 Ultra low emission vans are not affected by CCT because they are subject to van benefit charge (see section 8). 5.
Salary sacrifice for the provision of benefit in kind 5.1 ULEVs are eligible for tax benefits if purchased through a salary sacrifice agreement made between an employer and employee, where the employee's cash remuneration is reduced in exchange for an equivalent BIK (as explained in Section 4). Due to the reduction in pay, this results in a reduced income tax liability for the employee and reduced national insurance liability for both parties. 5.2 Due to their wider societal benefits, ULEVs were exempted from the reforms announced in the Autumn Statement 2016 to remove the income tax and employer NICs advantages resulting from such schemes, whereby the taxable value of the BIKs provided through salary sacrifice is fixed at the higher of the amount of cash forgone or the amount calculated under the existing BIK rules.5 6.1 Car fuel benefit charge is paid by employees who receive free fuel from their employer and a portion of it is used for private mileage in a company car and not repaid in full by the employee. Tax must be paid on the cash equivalent of the BIK represented by that fuel. 6.2 The value of this benefit is calculated by using the CCT appropriate percentage of the vehicle multiplied by a ‘fuel benefit charge multiplier’: budget-2017-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances 5 For the purposes of the salary sacrifice exemption, ultra low emission vehicles are defined as those

£23,400 for 2018-19. As with CCT, the employee then pays Income Tax and the employer pays National Insurance Contributions on this amount. 6.3 There is no car fuel benefit charge if employees repay the cost of their private mileage in full. They may use the rates published by HMRC – the advisory fuel rates (AFRs) – to do so.6 6.4 As electricity is not a road fuel, the car fuel benefit charge does not apply to electric charging. If an employee uses a company car, no BIK arises on charging their vehicle at the workplace. 7. Workplace electric vehicle charging - benefit in kind exemption 7.1 The government announced at Autumn Budget 2017 that employer- provided electricity, provided from workplace charging points for charging employees' own electric vehicles, is exempt from being taxed as a BIK from 6 April 2018. The legislation for this exemption will be introduced at 7.2 The provision by an employer of a chargepoint for an employee at their 7.3 A consultation seeking comments on the workplace charging tax exemptions for electric and plug-in hybrid vehicles runs until 5 July 8.1 Van benefit charge is levied when an employer provides an employee with a van for private use. The charge is set at a flat £3,350 in 2018- 19. The employee pays Income Tax on this amount and the employer pays National Insurance Contributions. The charge does not apply if the private use of the van is only ordinary commuting in and out of work or is 8.2 Zero emission vans are currently only liable for a proportion of the full van benefit 40% for 2018-19. This will increase on a tapered basis reaching parity with the main rate in April 2022. 9.1 If an employer gives an employee a van to use which is subject to the van benefit charge and pays for their fuel, the employee will need to pay a fuel benefit charge. Van fuel benefit charge is set at a flat rate, £633 in 9.2 Electricity is not treated as a fuel, so it is not subject to the van fuel benefit charge. This means that if an employer allows an employee with a company van to recharge at work, this does not fall under van fuel 6 7

benefit charge. From 6 April 2018, no BIK arises in relation to the electricity used to charge a privately owned van. 10. Advisory Fuel Rates (AFRs) 10.1 AFRs provide a pence per mile rate, which an employee can use to reimburse their employer for the cost of private mileage where an employer provides free fuel for a company car. 10.2 They may also be used to reimburse employees for business mileage when the employee buys the fuel for their company car. If an employer chooses to reimburse an employee with a company car for fuel used for business, this is not considered to be a taxable benefit. depending on engine size and fuel type rather than having to keep detailed records for each vehicle. 10.4 Employers are free to use the actual cost of fuel if they wish. But they will need to keep records to demonstrate how they have arrived at the calculation and may not use an averaging method over a number of cars. The latest rates are available on the HMRC website.8 10.5 If you have a petrol-hybrid car, you can use AFR petrol rates. If you have a diesel-hybrid car, you can use AFR diesel rates. 10.6 As electricity is not considered to be a fuel for the purposes of car fuel benefit legislation, AFRs do not apply to battery electric cars. 11. Enhanced Capital Allowances (ECAs) 11.1 An ECA allows a business to write off the whole cost of an asset against taxable profits in the year of purchase. ECAs are available for certain energy and water efficient technologies. 11.2 ECAs for cars are based on their CO2 emissions. Cars purchased with  Of 50g/km or less qualify for a 100% First Year Allowance (FYA). This allowance only applies to new cars. Cars that are leased also do not  Up to 110g/km qualify for a writing down allowance at 18% a year;  Over 110g/km qualify for a lower "special rate pool" writing down 11.3 The government announced at Budget 2016 that it will extend the 100% FYA for low emission cars until April 2021. The government will review the case for the FYA and the appropriate emission thresholds from 2021 8

11.5 A 100% FYA is available for zero emission goods vehicles. Vans are not eligible for both the Plug-in Van Grant and the FYA.
11.6 A 100% FYA is also available for businesses that install gas refuelling equipment for vehicles that require natural gas, hydrogen or biogas. 11.7 Eligible equipment can 11.8 It was announced at Autumn Budget 2017 that the FYA for both zero emission goods vehicles and gas refuelling equipment will be extended 11.9 A 100% FYA is available for the installation of electric vehicle charging infrastructure. This FYA was announced at the Autumn Statement 2016, and took effect for expenditure incurred on or after 23 November 2016. The measure will expire on 31 March 2019 for Corporation Tax and 5 April 2019 for Income Tax purposes. 12. Approved Mileage Allowance Payment (AMAPs) 12.1 AMAPs are applied to employee-owned vehicles that are used for business mileage, providing the pence per mile rate at which HMRC allows employers to reimburse their employees, without liability to Income Tax or National Insurance Contributions. If reimbursements in excess of the AMAPs rates are made, the excess is reportable to HMRC. 12.2 Unlike AFRs, electric and hybrid cars are treated in the same way as petrol and diesel cars for the purposes of AMAPs. The latest rates can be found on the HMRC website.9 12.3 Self-employed taxpayers may also use authorised mileage rates to compute their vehicle expenses. If they claim mileage rates they cannot claim capital allowances or actual running costs. If they have previously claimed capital allowances in respect of a vehicle then they cannot use mileage rates for that vehicle. 13. Mileage Allowance Relief (MAR) 13.1 If an employer does not fully reimburse an employee for the cost of business mileage in the employee’s own car in accordance with the AMAP rules, that employee is entitled to apply to receive MAR on the 9

13.2 For the purposes of MAR electric and hybrid cars are treated in the same way as petrol and diesel, and employees with electric cars are entitled to apply for MAR if they are not benefitting from full AMAPs.