Car allowance and claiming for fuel - a strange one!

Myron_Bolitar

Hi Guys,

I need a bit of advice on car allowance etc for my new job.

I am just started working for a dutch company (as the sole UK employee) They are paying me £5000 a year car allowance (to use my own car - which I have had to buy) but are stating that I cannot claim for milage at the government stipulated rate, but instead just put all company fuel on my company credit card.

Is this viable/legal from a taxation point of view? I mean, how can you even calculate how much fuel is used for business and how much is used for private.

If I cannot claim back at the normal 40p per mile for first 10,000 miles and 25p thereafter, I think I am going to be out of pocket, becuase £5000 is not going to cover my PCP payments, Insurance/Servcing/upkeep.

Any advice greatly appreciated

NiceGuyEddie_2

Myron_Bolitar wrote: »

Hi Guys,

I need a bit of advice on car allowance etc for my new job.

I am just started working for a dutch company (as the sole UK employee) They are paying me £5000 a year car allowance (to use my own car - which I have had to buy) but are stating that I cannot claim for milage at the government stipulated rate, but instead just put all company fuel on my company credit card.

Is this viable/legal from a taxation point of view? I mean, how can you even calculate how much fuel is used for business and how much is used for private.

If I cannot claim back at the normal 40p per mile for first 10,000 miles and 25p thereafter, I think I am going to be out of pocket, becuase £5000 is not going to cover my PCP payments, Insurance/Servcing/upkeep.

Any advice greatly appreciated

I mean, how can you even calculate how much fuel is used for business and how much is used for private.

Same way as everyone else, keep a mileage log. Have a notebook in your glovebox, and make a note of miles per journey and purpose of journey, ie personal or business.

I'm a bit confused about the being out of pocket part - if fuel gets put on the company credit card, does the company not pay for this?

Myron_Bolitar

NiceGuyEddie wrote: »

Same way as everyone else, keep a mileage log. Have a notebook in your glovebox, and make a note of miles per journey and purpose of journey, ie personal or business.

I'm a bit confused about the being out of pocket part - if fuel gets put on the company credit card, does the company not pay for this?

I can log how many miles I do, but how do I know how much money it cost in fuel to travel that distance? If I am not claiming at a rate per mile, it is impossible to accurately calculate how much a journey costs? Isn't it?

I will be 'out of pocket' because the car allowance will not cover all of my outgoings in relation to the car, .eg PCP payments/insurance/breakdown cover/servicing/maintenance. The government stipulated rate that you claim for mileage is set at that level to incorporate wear and tear etc of the private vehicle you are suing for company business. I will not be making a single penny on my mileage.

BoGoF

Basically, your employer can pay you as little as they want. Some employers pay a lot less than you'll be getting.

You just have to weigh up the pros and cons of your arrangement.

Remember the full amount of the fuel spend will be a taxable benefit in kind but you can claim tax relief on the business mileage using the approved rates.

Myron_Bolitar

Thanks for the advice. What I am still having trouble with is, if the company are not stating an amount to claim per mile (they are just saying whatever fuel you use for business stick it on company credit card, any fuel for private, pay yourself) how can I accurately quantify how much I am receiving from the company each business mile. I could already have £20.00 worth of privately paid fuel in the car when I start my business trip, how can I tell how much fuel has been used (per mile) for that business trip in order to know how much extra to claim back at the end of the year?

ncthomas1

Have a look at my other reply to the thread above yours on fuel rates/ claiming the diff from HMRC etc that should help

Myron_Bolitar

ncthomas1 wrote: »

Have a look at my other reply to the thread above yours on fuel rates/ claiming the diff from HMRC etc that should help

Thanks for this, but again this advice assumes that the company are stating an amount that I can claim per mile. They are not! They are just saying put company fuel on the company credit card. Therefore I have no way of actually calculating what I am receiving per mile, becuase I have no way of calculating how much the fuel for each journey 'actually' costs. For example, was there still some private fuel left in the car when I started journey and did I use some of that for the business trip or for example I were to put £50.00 in the tank for a business trip, I would not know how much was left in the tank and the end of that journey and thus how much the journey cost.

I guess the only solution is to insist that the company specigy a mile age claim rate.

jennifernil

Myron_Bolitar wrote: »

Thanks for the advice. What I am still having trouble with is, if the company are not stating an amount to claim per mile (they are just saying whatever fuel you use for business stick it on company credit card, any fuel for private, pay yourself) how can I accurately quantify how much I am receiving from the company each business mile. I could already have £20.00 worth of privately paid fuel in the car when I start my business trip, how can I tell how much fuel has been used (per mile) for that business trip in order to know how much extra to claim back at the end of the year?

All you need to do is note your business miles, let's say 8000, multiply by the 40ppm, so £3200, and deduct the fuel your employer paid for, say £1200, and claim tax relief on the difference of £2000.

If you look at the mpg your car does and charge that on the company credit card, then it should work out ok. As long as you do it reasonably, I doubt the company will be bothered.

@ 20% rate you will get £400 tax back.

ncthomas1

I think so, or you need to do some hard sums!
Let me see if I can help you
1. I would advise, that you have a proper mileage log, where you write down the start mileage and end milege on the odometer.
You then write it all down, and as well, obviously write down any PRIVATE miles travelled
2. At the end of the month, work out how many miles in total you travelled
3. Work out how many personal miles v business miles, as a percentage
4.Then, add up all the money you spent on the card (Keep receipts or a note everytime you put £X amount in the car)
5. Divide the total amount of fuel used, in £, by the total miles travelled, then apply the % of private miles to it, to work out how much you spent, travelling business miles


Example:

total miles 200
total business miles 150
Total personal miles 50 (so, that is 25%)

Total money spent £50
25% of £50 = £12.50
Therefore £37.50 is spent on business miles
Divided by 150 miles = 0.25p mile

If you get stuck, shout - Im an accountant so not bad at this kind of stuff x

Myron_Bolitar

ncthomas1 wrote: »

I think so, or you need to do some hard sums!
Let me see if I can help you
1. I would advise, that you have a proper mileage log, where you write down the start mileage and end milege on the odometer.
You then write it all down, and as well, obviously write down any PRIVATE miles travelled
2. At the end of the month, work out how many miles in total you travelled
3. Work out how many personal miles v business miles, as a percentage
4.Then, add up all the money you spent on the card (Keep receipts or a note everytime you put £X amount in the car)
5. Divide the total amount of fuel used, in £, by the total miles travelled, then apply the % of private miles to it, to work out how much you spent, travelling business miles


Example:

total miles 200
total business miles 150
Total personal miles 50 (so, that is 25%)

Total money spent £50
25% of £50 = £12.50
Therefore £37.50 is spent on business miles
Divided by 150 miles = 0.25p mile

If you get stuck, shout - Im an accountant so not bad at this kind of stuff x

Thanks very much for all your help - very much appreciated!!!

Sounds like a good solution

jennifernil

I think the OP's main problem is that they are only supposed to charge the business fuel to the company.