Company Car or Car Allowance

KPR11

LongTermLurker wrote: »

Don't recall OP saying his fuel would be payed for?

In my experience a company car goes hand in hand with either all the fuel paid (in which case even if the OP drives the car from home to work, it's deemed to be private use) or no fuel paid. I was simply highlighting the fact that if he has any private use then he would be liable for fuel benefit unless reimbursed in full. Is it not a valid point?

If he is claiming back the business element then the point about private use is moot.

LongTermLurker wrote: »

And don't forget that even these days, you won't pay 40ppm for fuel, or even 24ppm - the difference adds to your income. So let's say fuel really costs 15ppm (it'll be roughly right) and you do 20000 business miles:

40p - 15p = 25p
25p x 10000 = £2500

25p - 15p = 10p
10p x 10000 = £1000

Annual "allowance" over and above the price you pay for petrol = £9500 or £38000 over 4 years - your car will wear out quicker cos you're driving it more; it won't be worth as much when you sell it and you'll pay more in tyres/servicing/etc, but it won't come anywhere near £9500 a year.

Not sure how you come to £9,500. If HMRC AMR is used then 20,000 miles would be £6,500 not £9,500 (unless you have assumed that the tax saved on his car benefit would total £3,000 - that would one expensive and/or polluting car)

LongTermLurker

KPR11 wrote: »

In my experience a company car goes hand in hand with either all the fuel paid (in which case even if the OP drives the car from home to work, it's deemed to be private use) or no fuel paid. I was simply highlighting the fact that if he has any private use then he would be liable for fuel benefit unless reimbursed in full. Is it not a valid point?

Sorry, I agree, I wasn't having a pop. He didn't mention getting a fuel card so I assumed it is "no fuel paid" and he would then claim back business fuel on expenses, probably at an agreed p per mile. Yes, if he has a fuel card (like me) then it's a valid point. However, even that's a no brainer because if he's a high rate tax payer it means all his private fuel comes with an automatic 60% discount (he'll just get a benefit in kind on his P11D and pay income tax on it).

Not sure how you come to £9,500.

£6000 annual allowance
+ £2500 on first 10k business miles based on difference between allowance and my notional 15ppm fuel
+ £1000 on second 10k miles based on difference between allowance and my notional 15ppm fuel

If HMRC AMR is used then 20,000 miles would be £6,500 not £9,500 (unless you have assumed that the tax saved on his car benefit would total £3,000 - that would one expensive and/or polluting car)

But remember that he still has to buy the fuel, so that £6500 mileage allowance is reduced to the £3500 above, subject to my notional fuel cost.

KPR11

LongTermLurker wrote: »

Sorry, I agree, I wasn't having a pop.

That's ok

LongTermLurker wrote: »

However, even that's a no brainer because if he's a high rate tax payer it means all his private fuel comes with an automatic 60% discount (he'll just get a benefit in kind on his P11D and pay income tax on it).

Not really. Like so many other things in tax, it depends. It work's really well if he has a low emission car or does a lot of private mileage. If he doesn't then not quite because the benefit could work out to be a lot more expensive then the actual cost of the fuel

LongTermLurker

KPR11 wrote: »

Not really. Like so many other things in tax, it depends. It work's really well if he has a low emission car or does a lot of private mileage. If he doesn't then not quite because the benefit could work out to be a lot more expensive then the actual cost of the fuel

Don't see how you work that out, and I come in as the exact opposite of your "really well" example, though I think you mean high fuel economy rather than low emissions, because emissions don't affect what you pay if its your own car.

Assume he has a fuel card and puts £1000 on it in a month. 20% of his mileage is business and 80% is private. Therefore, he has an £800 benefit in kind; this happens for a full 12 months and £9600 is entered on his P11D. He pays 40% tax on that benefit, so his private fuel has cost him £3840, or £320pm.

If he didn't have the fuel card, he'd still have to buy the private fuel. Whether he puts the fuel on the fuel card or his credit card makes no difference, it's still the sam x pence per litre. But if it went on his credit card he'd have paid the full £800.

Or is your experience based on another way of getting the benefit rather than a fuel card? All I do is put all my fuel on a card, tell my company how many business and private miles I did and they work out the proportions - they pay for their part and I get a BIK of my part.

bennymac

I find some if this odd to what my employer does I had the option to take the allowance instead of the car but as I was doing over 30k miles a year it seemed better to keep the company car. in my case i reclaimed business miles at 11ppm for a 2.0 diesel.
I was told if i took the allowance instead I would have to provide a certain standard of car, insure it for business and would still only get 11ppm.....

the only difference I know if is if someone in the company genuinly uses their own car for a trip then they get 40ppm..

LongTermLurker

bennymac wrote: »

I find some if this odd to what my employer does I had the option to take the allowance instead of the car but as I was doing over 30k miles a year it seemed better to keep the company car. in my case i reclaimed business miles at 11ppm for a 2.0 diesel.
I was told if i took the allowance instead I would have to provide a certain standard of car, insure it for business and would still only get 11ppm.....

the only difference I know if is if someone in the company genuinly uses their own car for a trip then they get 40ppm..

Those figues are the maximum allowed by HMRC. Your employer doesn't have to pay those figures; he can pay more or less than that. If he pays more, you'll end up paying tax on the difference and if he pays less, you can claim back tax on the difference - clearly the more he pays you the better.

It's common for your car (if on an allowance) to have to meet certain standards (good point you've made actually - OP, have you checked this? They might not allow you to use your car if it isonly 2 seats / convertable / land rover / 3 wheels / more than 3, 4 or 5 years old, etc).

I think the bit you missed is that if you'd taken the allowance you could have claimed back tax on the difference between the HMRC figures and 11p - still, with your mileage, the car might be the better option.

40 - 11p = 29p
29p x 10000 miles = £2900

25 - 11p = 14p
14p x 20000 miles = £2800

So you could have claimed tax back on £5700pa
= £1140 @ 20%
= £2280 @ 40%

The add on what your car allowance would have been and take off any extra cost of insurance etc.

The difference with OP is that he doesn't have to buy a car with his money - he already has one.

KPR11

LongTermLurker wrote: »

I think you mean low fuel economy rather than low emissions

I mean exactly what I said, emissions

LongTermLurker wrote: »

Assume he has a fuel card and puts £1000 on it in a month. 20% of his mileage is business and 80% is private. Therefore, he has an £800 benefit in kind; this happens for a full 12 months and £9600 is entered on his P11D. He pays 40% tax on that benefit, so his private fuel has cost him £3840, or £320pm.

Totally incorrect!

Fuel benefit is calculated using a formula which is:

Emission % X £16,900 (pro-rated if the car or fuel is not available for the full tax year)

The Emission % is dependent on just that emissions, being calculated as follows:

Emission <= 120g/km = 10%
135 - 139 g/km = 15%
140 - 144 g/km = 16% and so on up to a maximum of 35%

There is also an additional supplement of 3% for diesel cars (the max cap of 35% still stands)

So the maximum fuel benefit you can be taxed on in a tax year is £5,915 [35% X £16,900] such that the max tax is £2,366 - in this case you have to ask yourself do you actually use more than £45 pw of fuel on private use [£2,366 / 52] to justify the fuel benefit?

Hope that clarifies things for you!

KPR11

KPR11 wrote: »

Fuel benefit is calculated using a formula which is:

Emission % X £16,900 (pro-rated if the car or fuel is not available for the full tax year)

The Emission % is dependent on just that emissions, being calculated as follows:

Emission <= 120g/km = 10%
135 - 139 g/km = 15%
140 - 144 g/km = 16% and so on up to a maximum of 35%

There is also an additional supplement of 3% for diesel cars (the max cap of 35% still stands)

So the maximum fuel benefit you can be taxed on in a tax year is £5,915 [35% X £16,900] such that the max tax is £2,366 - in this case you have to ask yourself do you actually use more than £45 pw of fuel on private use [£2,366 / 52] to justify the fuel benefit?

Hope that clarifies things for you!

May I add that the above calculation and benefit stands regardless of the private mileage done! i.e. the same benefit calculation is done whether you do 100 private miles per month or 2,000 private miles!

LongTermLurker

KPR11 wrote: »

I mean exactly what I said, emissions



Totally incorrect!

Fuel benefit is calculated using a formula which is:

Emission % X £16,900 (pro-rated if the car or fuel is not available for the full tax year)

The Emission % is dependent on just that emissions, being calculated as follows:

Emission <= 120g/km = 10%
135 - 139 g/km = 15%
140 - 144 g/km = 16% and so on up to a maximum of 35%

There is also an additional supplement of 3% for diesel cars (the max cap of 35% still stands)

So the maximum fuel benefit you can be taxed on in a tax year is £5,915 [35% X £16,900] such that the max tax is £2,366 - in this case you have to ask yourself do you actually use more than £45 pw of fuel on private use [£2,366 / 52] to justify the fuel benefit?

Hope that clarifies things for you!

Don't get ratty. Emissions have nothing to do with it if you are taking an allowance for a private car - you're using your car, whever car, for company business. I think we're talking at cross purposes - you seem to be concentrating on company cars and I'm talking about allowances.

Everything I'm talking about, I'm doing and have seen the results at year end with P11D and self assessment, which resulted in a tax rebate.

KPR11

LongTermLurker wrote: »

Don't get ratty.

For starters, I am not getting ratty with you

LongTermLurker wrote: »

you seem to be concentrating on company cars and I'm talking about allowances.

and you are right I am talking about fuel allowance on a company car i.e. the company provides you with a car and pays for the fuel

LongTermLurker wrote: »

Everything I'm talking about, I'm doing and have seen the results at year end with P11D and self assessment, which resulted in a tax rebate.

Finally, I am a tax accountant - this is what i do for a living. It's no skin of my nose if you want to advise some guy on here and increases his tax liability. Neither you nor he is my client, I ain't making nothing - if anything wasting my time patiently trying to explain things to someone who thinks he knows it all about tax