Company Car/Cash and Fuel Card

Notanaccountant

Hello all,

I have been trying to work out if I would be better off in the long run opting out of my company car and fuel card but keep getting a little stuck and or confused.

I have worked out so far that by opting out I would have an increased net take home pay of £435 a month including my car allowance based on:

listentotaxman.com

Assuming that opting out of the fuel card and company car my tax rate would return to the normal.

Where I am getting lost is the fuel part as I currently do 14000 miles private (including commuting) and 7000 miles Business. The company would still give me a fuel card. As I am led to believe (or this is where I am getting mixed up) I would repay the private mileage from my salary (I assume this is post tax?) at a rate calculated at a proportion of total fuel cost/total miles to give pence per litre. if this worked out to be for round figure 10p/litre I would then be able to claim the remaining 30p for business miles from the inland revenue.

I would calculate that to be

7000x0.10=£700 cost to me
7000x0.30=£2100 in my pocket

14000mls @ 12p/ml (typical cost in my vehicle) £1680

£2100-£1680=£420 (better off per annum)

I therefore calculate that I would have reasonably £435 plus a possible additional £35 a month mileage depending to put towards a new vehicle, maintenance, insurance etc and fuel would pay for itself.

Can some one please correct me/shoot me down in flames or congratulate me on my marvelous workings.

Many thanks.

mark55man

firstly - unless you do extreme mileage, or have a reason for particulalry wanting a company car, I would say you are normally way better off opting out of the car. I was £500 a month better off when I swapped (mind you I did go from a 51 plate Xtype Jag to an Xplate diesel ). at your mileage I would say a personal lease would be expensive but some of my colleagues do it

generally this whole thing is very very confusing.

is the place you commute to your normal place of work - ie somewhere you have spent or expect to spend 40% or more of your time for 2 years (clock starts the moment you expect your place of work to be your place of work for 2 years). if you split your work between 2 places 50 50 they can both be your normal place of work. places must be more than 5 miles apart to count as different.

if there is a difference between what the company pays you for miles and the inland revenue limits (40p upto 10000 and then 25p), you put the difference in your tax form and you get relief at your highest rate of tax ie if thats 40% the revenue refunds you 40p for every £1 from the calculation. you can only do that for travel that is not to you normal place of work

my experience with fuel cards is that they are normally for all your mileage so can't answer that bit of your question. whether the company makes you pay for private mileage is different from what you can claim back

your post is also a bit confusing (but as a reflection of the above) - I am not sure where the 30p comes from

Notanaccountant

Thanks for your response Mark88man.

Yes unfortunately it is my permanent place of work hence the higher private mileage mainly accountable to commuting so there is no getting away from that.

mark88man wrote: »

your post is also a bit confusing (but as a reflection of the above) - I am not sure where the 30p comes from

Apologies to clarify the 30p is the 40p coverage from the inland revenue minus the 10p per mile in my calculation. As in my example my employer pays the cost of the business fuel at the rate of 10p I would therefore reclaim the remaining 30p from the inland revenue. Hope this is clearer.

You answer seems to support what I have written although I am still unsure on the fuel card side.

Rolo_Tomasi

Where your sums fall down is that you can only claim tax relief on the difference between the amount paid by your company for business travel (10ppm) and the Revenue allowance (40ppm for first 10,000 miles and 25ppm for any excess). Therefore the 'cash in your pocket' in your example would be £2,100 at either 20% or 40%.

Does the £435 include a 'car allowance' paid by your company or is it just the increase in net pay following a tax code change. If is the later you need to go back to your employer and ask for a car allowance.

I would disagree with the previous poster that you are normally way better off opting out of the car scheme. I find that generally, if you compare like for like cars then it is better to have a company car as the extra tax is less than the cost of running your own car.

mark55man

good luck - tried to help a bit more but it just did my head in.

you are on the right track but you might want to read the T&C of your card and the relevant inland revenue guidance

also I think arval PHH are a fleet management company - I think their website have some good tools (+some accountancy firms have useful calculators)

Notanaccountant

Thanks for your response.

It seems I am on the right track then, I would agree that I am not sure at least in the short term that I am better off regarding the model of car I would get compared to a company vehicle.

Rolo_Tomasi wrote: »

Where your sums fall down is that you can only claim tax relief on the difference between the amount paid by your company for business travel (10ppm) and the Revenue allowance (40ppm for first 10,000 miles and 25ppm for any excess). Therefore the 'cash in your pocket' in your example would be £2,100 at either 20% or 40%.

Thanks for that, yes I am aware of the 10K mileage shift on the rate but it would be a rarity for that to occur in my instance. A little puzzled where the tax rate comes into the equation though. If I am a 40% tax payer for example how does this affect anything else?

Rolo_Tomasi wrote: »

the £435 include a 'car allowance' paid by your company

The £435 includes my car allowance (I think I stated this above)

Many thanks for your time and help.

voiceofreason

Chips and gravy FTW

Rolo_Tomasi

The government do not pay you 30ppm - you get tax relief on the amount. Therefore if your claim came to £2,100 and you are a higher rate taxpayer (income above £43k ish) then you would receive a tax refund of £840 (40% of £2,100). If you are a basic rate tax payer the refund would be £420.