Business motoring: a mixed picture
The Budget 2011 announced further changes which will affect businesses and their employees who use a car for business. There are changes for both employees provided with a company car, and for those using their own car for business journeys.
Use of a privately owned car for business
The amount per mile that an employee can be reimbursed tax free for business journeys is governed by the Authorised Mileage Allowance payments regime (AMAPs). The rates for travel by car have been unchanged for a decade now, but the Budget announcements included a welcome increase in the main rates.
Taxation of company cars
Employees provided with a car for business travel, for whom the car is also available for private use pay tax based on the list price of the car and the CO2 emissions of the vehicle. Various changes are due to commence in April 2011 and April 2012 which have been previously announced
Free fuel for private motoring
Where an employee is provided with free fuel for private motoring by his employer, he is taxed at the relevant percentage (determined by CO2 emissions) of the fixed fuel benefit. This is currently £18,000, having been increased from £16,900 in April 2010 (an increase of 6.5%) which was the first increase for two years.