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  • FIRST POST
    • luvpenguins
    • By luvpenguins 10th Mar 17, 10:48 AM
    • 28Posts
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    luvpenguins
    Company car and fuel benefit
    • #1
    • 10th Mar 17, 10:48 AM
    Company car and fuel benefit 10th Mar 17 at 10:48 AM
    Hello

    I have tried to do my own research on this, and even rang HMRC but got cut off just before I was due to speak to someone!

    I currently pay 3798.00 per year tax on fuel benefit, and 3129.00 for my company car.

    This puts my taxable income to 44790.00pa. The full tax I pay is 7116.00pa.

    Will I be much better off if I drop out of the fuel benefit scheme?

    I would have to pay back to my company 11p per mile for all personal miles if I came out, but I don't do a lot.

    Thanks in advance.
Page 1
    • Dazed and confused
    • By Dazed and confused 10th Mar 17, 10:56 AM
    • 1,706 Posts
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    Dazed and confused
    • #2
    • 10th Mar 17, 10:56 AM
    • #2
    • 10th Mar 17, 10:56 AM
    You sure about this,

    I currently pay 3798.00 per year tax on fuel benefit


    Is it not more likely you pay tax ON 3798.00 fuel benefit (I.e £760/year for basic rate payer in the forthcoming tax year)

    Would be more than £760 in Scotland but still nowhere near £3798 cost to you
    Last edited by Dazed and confused; 10-03-2017 at 11:00 AM.
    • luvpenguins
    • By luvpenguins 10th Mar 17, 11:44 AM
    • 28 Posts
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    luvpenguins
    • #3
    • 10th Mar 17, 11:44 AM
    • #3
    • 10th Mar 17, 11:44 AM
    No, I am not sure about anything after trying to understand my tax form!

    I think you are correct, I pay tax ON 3798.00 FB, so £760 per year. Now that you have pointed that out, is it as simple as saying I won't pay that tax, so I'll be about £60 a month better off?

    But I also need to take personal mileage into account, so say I drove 50 miles a week personal @11p per mile that would cost me about £22.00 per month...

    Plus all the extra admin work in having to account for all of the business miles.

    It's just that a colleague of mine said he was about £200 better off per month since he opted out of the fuel benefit, but I can't see how?
    • Dazed and confused
    • By Dazed and confused 10th Mar 17, 12:05 PM
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    Dazed and confused
    • #4
    • 10th Mar 17, 12:05 PM
    • #4
    • 10th Mar 17, 12:05 PM
    Only your colleague can answer that.

    Maybe his car had much worse co2 emissions so was costing more in the first place?
    • anxious_mum
    • By anxious_mum 10th Mar 17, 9:20 PM
    • 397 Posts
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    anxious_mum
    • #5
    • 10th Mar 17, 9:20 PM
    • #5
    • 10th Mar 17, 9:20 PM
    Thanks, I will check. But in my situation I think I'll be better of staying put.
    2013 NSD challenge 3/10
    • dori2o
    • By dori2o 12th Mar 17, 11:16 AM
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    dori2o
    • #6
    • 12th Mar 17, 11:16 AM
    • #6
    • 12th Mar 17, 11:16 AM
    In general, from my experience, most people are only better off having a fuel benefit charge if they do high amounts of personal/private mileage.

    Dont forget that commuting to/from work is private mileage in the vast majority of cases, unless you work at temporary workplaces for the majority of the time.

    Therefore in your case, you will pay approx £64 a month (as a basic rate taxpayer) from 6 April. This means that at the rate of 11p per mile you would have to be doing more than approx 575 private miles per month/6900 per year to be getting value for money

    If you were to give up the card entirely and pay for all fuel, then you would be better off only if your monthly spend on private fuel was less than the £64 a month you are charged for the benefit in kind, plus you'd need to log all your business mileage and reclaim the 11p per mile from your employer.

    Clearly this also depends on how fuel efficient the car is, the type of mileage you do (inner town/city or motorway) and your driving style. Does 11p per mile actually cover the physical cost of the mileage done?
    Last edited by dori2o; 12-03-2017 at 11:19 AM.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • redpete
    • By redpete 14th Mar 17, 7:30 AM
    • 4,117 Posts
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    redpete
    • #7
    • 14th Mar 17, 7:30 AM
    • #7
    • 14th Mar 17, 7:30 AM
    Clearly this also depends on how fuel efficient the car is, the type of mileage you do (inner town/city or motorway) and your driving style. Does 11p per mile actually cover the physical cost of the mileage done?
    Originally posted by dori2o
    Very unlikely, my fuel (diesel) costs about 11.5p per mile at the moment and other mileage related costs (tyres, servicing, depreciation) add about another 14p per mile.
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • Sunderland lad
    • By Sunderland lad 16th Mar 17, 4:53 PM
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    Sunderland lad
    • #8
    • 16th Mar 17, 4:53 PM
    Benefit in Kind (BIK
    • #8
    • 16th Mar 17, 4:53 PM
    On a slightly related issue, really grateful if someone can help with my question.


    I understand that if you are a standard rate taxpayer you then pay 20% BIK. If you are in the higher bracket you then pay 40% BIK. That bit I get. So, according to parkers, my car BIK would be £92 per month for a standard tax payer or £183 per month for a higher rate earner.However, if you just nudge into the 40% rate, do you then pay 40% on the full value.


    For example, I live in Scotland where, next year, the rate changes at £43k pa, So, if I earned, say, £42,995 I would expect to pay £92pm. But, if I got a pay rise to say, £43,250, would I then have to pay £183pm (£1100 more) or would I just pay the extra 20% on the difference on £250 I earned above the threshold? Does that makes sense.


    I can't find a plain English answer anywhere.
    Cheers.
    • Dazed and confused
    • By Dazed and confused 16th Mar 17, 5:58 PM
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    Dazed and confused
    • #9
    • 16th Mar 17, 5:58 PM
    • #9
    • 16th Mar 17, 5:58 PM
    If that was the totality of your income (including the value of the car benefit) then you would pay 40% tax on £250.

    It is only income above the 43k which you have to pay 40% tax on.

    Benefits like a company car are treated like any other income so it isn't as simple as saying you pay 20 or 40% on the benefit.

    If your salary is £42995 then with the car you will be a higher rate payer next year (in Scotland) and would be paying 40% tax on virtually all of the car benefit.
    Last edited by Dazed and confused; 16-03-2017 at 6:08 PM.
    • dori2o
    • By dori2o 16th Mar 17, 8:56 PM
    • 7,302 Posts
    • 12,195 Thanks
    dori2o
    Very unlikely, my fuel (diesel) costs about 11.5p per mile at the moment and other mileage related costs (tyres, servicing, depreciation) add about another 14p per mile.
    Originally posted by redpete
    In the case of the original post the poster has a company car therefore they have no servicing/depreciation costs. This is why the advisory fuel rate is only 11p per mile, its set only to cover the fuel cost.

    In my own car ( 2005, 1.6, 16V petrol), with my driving style, the fuel cost per mile averages approx 12p/mile. Around 2p per mile less than the advisory rate for petrol cars with an engine size of between 1401 and 2000cc.

    See details here for the current advisory rates which also depend on engine size and fuel type https://www.gov.uk/government/

    If you drive your own car for business use then the mileage rates are different and are set to take those additional costs into account.

    Currently mileage relief for business mileage is:

    45p/mile for the first 10,000 miles, and 25p/mile each mile thereafter.
    To equate judgement and wisdom with occupation is at best . . . insulting.
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