HMRC’s intention is to change significantly the VAT fuel scale charges payable by businesses on the provision of fuel for private motoring for their company car drivers. The system of calculating the output VAT charge on a simple cylinder banded table is withdrawn for the businesses first VAT return commencing after 1 May 2007.

The new 21 band table will obviously take some getting used to and relies on knowing the benefit in kind percentage which is linked to the CO2 emissions of the car and the type of engine. Under the benefit in kind system there are discounts available for environmentally friendly cars.

The output VAT charge for a quarter is found by looking up the relevant percentage in the table.

Internet link: Budget notes pages 131 to 133