Budget 2007: VAT on fuel – Scale charges move to CO2 basis

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This Budget also sees the introduction of a change to a CO2 basis for calculating the scale charge for VAT on fuel used for private motoring. Rebecca Benneyworth reports.

This measure applies most generally to the self employed, as in larger businesses it would go hand in hand with a fuel scale charge for benefit in kind, and there are only around 40,000 drivers who are presently taxed on the benefit of free fuel.

The scale charges related to engine size are to be replaced from 1 May 2007 with a scale charge based on CO2 emissions, using the benefit in kind Table to set the emissions bands. This makes the published Table of scale charges quite long, but the distinction between petrol and diesel cars has been abolished and the scale charge is determined solely by reference to emissions...

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