BUSINESSES who pay their employees' fuel expenses will soon face new VAT fuel scale charges based on the energy efficiency of vehicles.
HM Revenue and Customs has announced changes to the VAT scale charge which take effect from May 1.
It will see the existing system replaced by a fuel scale charge based solely on the carbon dioxide rating of the car.
Carolyn Van Hecke, senior VAT manager at Bolton-based Cowgill Holloway chartered accountants, said: "Businesses must use the new scales from the start of their first accounting period on or after May 1.
"Full details of the new system will be clarified but it is expected that the table will mirror that used for direct tax purposes and have 21 bands with 5g/km increments. The table will provide businesses with the actual scale charge for a car within a particular band.
"Apart from now being based on CO2 emissions, the system will operate in exactly the same way as the current VAT fuel scale charge. The CO2 based system will be reviewed annually to ensure the charges reflect fuel price changes."
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