Company car and fuel card tax

freddieT · 25 June 2012 at 9:05PM

A role I have been offered comes with a company car and a fuel card with all private mileage included (or so i understand it) and am tyring to work out what this will cost me annually.

I think I have figured out the car element, based on a BMW116d I will pay 40% tax on 13% of the list price. this equates to about £1,086 (£20885 * 0.13 * 0.40).

in terms of the fuel though i am struggling to understand how this works. the company will provide me with a fuel card to fill up the car every time I am at the pump. I will commute 30k milles per year and probably do about 7k miles of private usage.

This being the case can anyone tell me how to calculate what tax i will pay based on these 37k miles per year. i think commuting is classed as private so i essentially will not be doing many (if any) "business" mileage. the reason i am getting a fuel card is becuase the commute is hefty...!

thanks to anyone who can provide any help and advice.

mrg9999 · 25 June 2012 at 10:25PM

There are a number of calculators out there. The second one quickly tells you what you need at both tax brackets to break even.
http://www.hmrc.gov.uk/calcs/cars.htm
Breakeven private mileage calculator
http://www.comcar.co.uk/newcar/companycar/poolresults/gfuelben.cfm?clk=1&empty=true#cctop

sujman · 25 June 2012 at 10:42PM

To work out the fuel element, all you need to do is multiply £20,200 (standard value applied to all cars) times the same percentages for the car. I.e. 13% and 40%.

In your case, this amounts to £1,050.40

For sure, in your case the fuel card is worth it as the tax payable is regardless of how many miles you do.

At a frugal cost per mile of 10p, if you bought all fuel yourself, you would spend £3,700 pa on fuel versus just over a grand in tax costs!

freddieT · 25 June 2012 at 11:10PM

thanks. i thought that was the case about the number of miles not being an issue though i guess if i racked up large mileage the company would be having words. as you say definitely worthwhile just paying the tax and using as much PM as possible. :-) one more thing though, does that tax come off pay monthly or is it annually on the P11D - if its annually then thats a big hit in one pay packet?!

sujman · 25 June 2012 at 11:33PM

It should come off monthly but your company could take unto 4 months to inform the tax office.

I recommend to inform the tax office yourself as soon as you get the car so that you pay correct tax from the outset. Otherwise they would normally revisit in the next financial year and adjust the tax code then for past undpayments. Rarely, if at all would they'd want a lump sum.

freddieT · 25 June 2012 at 11:46PM

i assume thats just by way of an adjusted tax code then with both the company car and the fuel tax reducing the code?

sujman · 26 June 2012 at 9:09AM

Yes they adjust the tax code. With me, I got my company car entitlement Oct 2011 year but HMRC were informed in around Jan 2012 and didn't change my tax code until Feb 2012.

I asked if the total tax due would be taklen in one go but they said no. They would take the correct monthly amounts in Feb and March and then from April onwards, after they worked out the total underpayment in 2011/12, they would adjust the tax code for 2012/13.

So, to not only to take the current tax costs but also the underpayment from the previous year.

As it happens, in my case, its not all been processed correctly, the underpayment from last year was underestimated so my tax code is not correct. I am currently still paying too little but but hope to sort it out all when the HMRC staff come off their strike and systems back to normal.

Company car and fuel card tax

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