All things Cars
VAT definitions and fuel rates
For VAT purposes the definition of a motor car has been amended several times over the years.
The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:
a) is constructed or adapted solely or mainly for the carriage of passengers; or
b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;
There are a number of exceptions to this rule: notably vehicles constructed to carry a payload of one tonne or more, i.e. double cab pick-ups such as a Toyota Hilux.
HMRC has announced new advisory fuel rates that can be used by employers paying employees a business mileage when driving an employer-provided car. These rates can also be used when charging employees for fuel provided for private miles and ordinary commuting.
These rates apply to all journeys on or after 1 December 2020 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.
|1400cc or less||10p (previously 10p)||7p (previously 7p)|
|1401cc to 2000cc||11p (previously 12p)||8p (previously 8p)|
|Over 2000cc||17p (previously 17p)||12p (previously 12p)|
|1600cc or less||8p (previously 8p)|
|1601cc to 2000cc||10p (previously 10p)|
|Over 2000cc||12p (previously 12p)|
Note that for hybrid cars you must use the petrol or diesel rate.
You can continue to use the previous rates for up to 1 month from the date the new rates apply.
The advisory electricity rate for fully electric cars is 4p per mile. Electricity is not a fuel for car fuel benefit purposes.