Private Car/Company Fuel Benefit

hendersonb

I have a company Van (Astra Van 1.7 Diesal). I get 10p/mile for company expenses, however i'm sure it actually costs more than this. My employer tells me that this is all the government say i'm entitled to. Is this true?

Andy_L

hendersonb wrote:

I have a company Van (Astra Van 1.7 Diesal). I get 10p/mile for company expenses, however i'm sure it actually costs more than this. My employer tells me that this is all the government say i'm entitled to. Is this true?

It's a believable number for the cost of diesel, if it's a company van what else are you paying for?

Andy

nej

moonrakerz wrote:

As the taxman would say - tough ! and to some extent your employer is offloading some of his business travel expenses on to you. As you rightly say, a fuel card does not compensate you for wear and tear on your vehicle.

To be honest, what you have is the worst possible combination, your own car and your company paying for the fuel, unless you do a LOT of private miles this may not be worth having. Over the last few years that nice Mr Brown has made it more and more doubtful as to the cost effectiveness of a company car/fuel for the individual.
My P11D figure for this (ending) tax year was £3024 for the fuel card. If you assume £4 a gallon and 40mpg, this equates to 6600 or 12000 miles per year (at standard and higher rate income tax). If you are not doing much over these figures as private mileage you should give serious thought to giving up your fuel card and just claiming business mileage from your employer. The company car and associated benefits are not the big incentive they used to be. My Mondeo Est and fuel was costing me £240 a month in extra tax, but as everyone in the house was insured to use it, the rest of the family made the absolute maximum use of it when I wasn't using it for work.
Talk to your employer, he may be amenable to paying you some sort of allowance instead of your fuel card as compensation for private mileage which would still allow you to claim business mileage from him. You would have to pay Tax and NI on any allowance.

If you are using your car for your employer's business, make sure that you are insured for that and try and get him to pay the additional insurance premium.

Not correct. If you have your own car, then you are not taxed on the fuel card at the £3000 rate. What you purchase in private fuel is simply taxed as a benefit-in-kind and is declared basically as extra salary. It is entered onto a different part of the P60 than "normal" company car/fuel cards are. I receive a cash allowance instead of a car these days, and because the fuel card is not taxable at the ridiculous rate I took it back again (I had given it up before as it was too expensive).

Business fuel is a completely seperate issue. As you are effectively receiving around 13p/mile for business use (you can calculate it based on the total cost spent on fuel and the total business mileage done but that is what is was roughly for me last year), you should be able to claim back the tax relief on the difference between that 13p received and the 40p allowance, to allow for wear-and-tear, as the OP has stated.

cash99

moonrakerz

You are confusing the position of fuel provide in conjuction with a company car and private fuel provided for a private car.

The OP has had all his fuel paid and this has been taxed as a benefit in kind. This is the same position as if the employer had given him a fuel allowance subject to PAYE. Effectively he is paying for his own fuel out of taxed income.

This is a poor arrangement for the employer because they will pay national insurance on business travel costs. It is a good arrangement for the employee, as the only pay tax on he actual private fuel used.

The OP has undertaken business journeys in his personal car and is therefore allowed to claim 40p per mile for the first 10000 miles and 25p thereafter.

Where you have a company car and also receive private fuel the benefit of the fuel is calculated differently, and can in a lot of cases mean that you pay more tax than the actual cost of the fuel used.


hendersonb

There are fixed tax free rates to re-imburse fuel to company vehicle drivers, and actually 9p for a 1.7l diesel is the correct rate. If your actual fuel costs are higher, then no further tax relief is available, but your employer ought to make up the difference.

chrisxr2

Is there an easier way to calculate because that tax site looks a tad daunting.
I get £460 pounds a month car allowance and claim 10.5 p per mile business mileage. I am driving a 1.4tdi car. Am i then entitled to an extra 30.5 p back from the government??? Is the 40p an arbitary figure or does it depend on what you are driving???

wonka

wizzer / chrisxr2,

I'm dismayed by the level of bad advice being thrown around in this thread, by people simply relaying their opinions who are not aware of the tax legislation.

Myself and my work colleagues are in exactly the same situation, and have been for a few years. Believe me, when we all found ourselves in this position we spent many many hours investigating this, talking to the inland revenue and reading through the tax guides online. We've also had to put up with other colleagues (usually still on the company car scheme) telling us we couldn't claim tax relief, again just spouting their opinions instead of doing their homework.

Just to clarify:
1) we receive a monthly car allowance, that is to be used to purchase a car, tax it, insure it, and service it. Naturally, this is received in our monthly salary, and is therefore taxed. In effect, the car allowance is treated as an extra monthly 'bonus', so we are not treated the same as company car drivers by the IR. The cars are our own. They belong to us even when we leave the company.
2) we are supplied with a fuel card, that can be used for personal and business mileage. The cost of fuel consumed is recorded by our employer, and included on a P11D (benefits) form.
3) we are NOT reimbursed for any of our business mileage. Some of my colleagues travel over 40,000 miles per year, whereas some do just a few hundred.

The outcome of our research was that
i) we do ineed have to pay tax on ALL of the fuel purchased on a fuel card, including that used for business travel, either on a tax return, or through PAYE. Naturally, paying tax on business travel seems unfair...
ii) HOWEVER this is offset by claiming tax relief of 40p per mile on all business-related travel. This is done on a P87 form, or a self-assessment form if applicable.

If anyone still wishes to contradict this, could you first clarify it with your local tax inspector. Or acquire tax leaflet IR125 (summarised here).

grumman

Wonka is 100% correct.
1. I too have a car benefit (which is taxed).
2. I have a fuel card which is used to pay for ALL fuel, business and private, I am taxed at source for ALL of this fuel.
3. On my tax return I claim an allowance of 40p for the first 10,000 (business) miles, then 25p for the remainder of the (business) miles.
I too had real problems finding someone in my position to explain it to me (including different people at the tax office), as most people who have a car allowance, usualy take a mileage allowance as well, which is deducted from the 40/25p figures quoted above). This deduction is not made if you do not receive a milage allowance.. REMEMBER, you have already paid tax on ALL fuel used (business and private).
Without wanting to take any credit from wonka, the reason why I know this is how it works (after assuming many things) is because I was Investigated by the Inland Revenue compliance unit, and I had got it wrong on my TAX return. I explained what/why I had claimed, and they explained what/why I had got it wrong. . . And explained how I could now write them a big fat cheque to correct my mistake:( But its better to get it sorted out earlier than later.

cash99

chrisxr2

You can claim 29.5p per mile for the first 10,000 miles and 14.5p per mile after that against your income. It make no difference what type of car you are driving.

wonka

Your employer is missing a trick. There is no reason to report the fuel used on business journeys as a benefit in kind, provided they have some record of the business miles. As you have to have the same record to make you personal tax relief claim this information is clearly available. Your employer is unnecessarily paying NIC at 12.8% on the cost of business fuel.

wonka

cash99,

Good point, I'd not thought about that. That would obviously reduce my tax burden.

Mind you, if they did subtract my business fuel costs, how would that affect the tax relief I claim? Would I need to reduce the figure?

cash99

Wonka

It is tax neutral for you. You would have a lower benefit in kind but also a lower mileage claim, by exactly the same amount.