The European Commission has accepted British government plans to reform on
environmental grounds its optional private mileage VAT system for business cars
driven for personal use.
The UK wants to vary the flat rate charged for private mileage under a
simplified system in place since 1986, according to the Co2 emitted by various
But because both systems break the EU’s sixth VAT directive, Britain needs
permission from the EU Council of Ministers, which has now been requested by the
Commission for until December 2015.
It said: ‘A charge geared to a higher number of bands based on Co2 emissions
will more accurately reflect private consumption.’
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Unincorporated businesses under the VAT threshold given an extra year to prepare before MTD becomes mandatory