The document summarizes changes to the company car fuel benefit charge for the 2012-13 and 2013-14 tax years. It increases the multiplier used to calculate the taxable benefit of free fuel provided by employers to employees from £18,800 to £20,200 for 2012-13. This supports environmental goals and public finances following increased pump prices. The change impacts about 250,000 individuals and households, most of whom pay higher or additional tax rates, and increases fuel benefit charges for all cars except zero emissions vehicles.

1. Company Car Fuel Benefit Charge
Who is likely to be affected?
Employees with company cars who receive free fuel from their employers, and who do not
reimburse their employers for the private use element of that fuel.
General description of the measure
The measure will increase the multiplier used to calculate the cash equivalent of the benefit
of free fuel provided to employees from £18,800 to £20,200 for the tax year 2012-13. There
is a further commitment to increase the multiplier by two per cent above the rate of inflation
(RPI) for the tax year 2013-14 which will be legislated by Order in the autumn, following
confirmation of the September 2012 inflation figure. As a result of this change the fuel benefit
charge will increase for fuel provided for all cars apart from zero emissions cars.
Policy objective
This measure supports the Government’s environmental agenda and the sustainability of the
public finances, following an increase in pump prices.
In addition to announcing the Fuel Benefit Charge (FBC) multiplier for 2012-13, the
Government is also announcing the 2013-14 rate, whilst committing to announce all future
rates a year in advance. This will provide greater certainty to employers and employees.
Background to the measure
Budget 2008 made a commitment to increase the fuel benefit charge at least in line with
inflation each year.
Detailed proposal
Operative date
The new rates will apply on and after 6 April 2012.
Current law
Sections 149 to 153 of the Income Tax (Earnings and Pensions) Act 2003 provide for the
treatment of fuel provided free by an employer for a company car as a benefit in kind. The
cash equivalent of the taxable benefit is calculated by multiplying the set figure (multiplier) by
the appropriate percentage which is based on the carbon dioxide emissions of the car
concerned.
There is no benefit in kind if the employee reimburses the employer for the private use of the
free fuel.
Proposed revisions
Legislation will be introduced by Treasury Order to increase the value of the multiplier from
£18,800 to £20,200. This represents a two per cent increase above inflation.

2. Summary of impacts
Exchequer
impact (£m)
2012-13
2013-14
2014-15
2015-16
2016-17
+5
+10
+10
+5
+5
These figures are set out in Table 2.1 of Budget 2012 and have been
certified by the Office for Budget Responsibility. More details can be
found in the policy costings document published alongside Budget 2012.
Economic
impact
Impact on
individuals
and
households
This measure is not expected to have significant economic impacts.
This measure would impact an estimated 250,000 individuals and
households, 60 per cent of whom are higher or additional rate taxpayers.
Equalities
impacts
The change applies equally to all company car drivers who receive free
fuel from their employers.
Impact on
business
including civil
society
organisations
It is expected that the measure will have a negligible impact on the
administrative burden and compliance costs for businesses and civil
society organisations. The timing of the announcement of the 2012-13
rates may create a small additional one-off cost for employers, as they will
have to operate revised tax codes at short notice. Announcing 2013-14
rates at the same time, and committing to announce future rate changes
one year in advance, ensures that this will not be an issue for future years.
Operational
impact (£m)
(HMRC or
other)
Changes in the FBC rate require administrative and software alterations
for HM Revenue & Customs. These are estimated to cost £0.4 million.
Such costs will not be incurred in 2013-14 as the rate is being
pre-announced.
Other impacts
Small firms impact test: Implementation of this change is considered
routine and the impacts on small firms are negligible in terms of
administrative and compliance costs.
A basic rate taxpayer driving a typical car, such as a Ford Focus, will be
paying approximately £100 more and a higher rate taxpayer around £200
more in 2012-13 compared with what they pay in 2011-12.
Monitoring and evaluation
The measure will be monitored through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Su McLean-Tooke on 020 7147
2665 (email: susan.mclean-tooke@hmrc.gsi.gov.uk).