tax on fuel benefit

samisaac

Apologies if this has been asked before but I can't seem to find any information in regards to fuel benefit. My husband has recently handed back his company car but we are unsure whether to do the same with the fuel card. Can anybody advise what the tax implications are. All information I seem to find relates to fuel benfit alongside a company car.

Any

That depends how the company want to deal with it.

But theoreticaly if he has fuel card for free use and no company car, he should keep log of business miles and the employer will put his total fuel bill on P11D and he will have to declare how many miles were done on business and pay tax on the rest.

samisaac

Any wrote: »

That depends how the company want to deal with it.

But theoreticaly if he has fuel card for free use and no company car, he should keep log of business miles and the employer will put his total fuel bill on P11D and he will have to declare how many miles were done on business and pay tax on the rest.

Thanks for that - yes I have checked and company have said that they will add total fuel bill on to P11D just was not sure how went about claiming back business miles and what rate to claim back, I guess will split will be about 5k personal and 10k business. Is the claim done retrospectively via a tax return, have just got away from completing them !!

Any

It is usually done in a way where employer files P11D return, HMRC change his tax code and he then sends them letter explaining the situation with supporting paperwork (ie mileage log or something).

The rate will usually be calculated by taking total fuel/divide total mileage... so your OH will need to log his mileage. My drivers usually log beginning of period clock, business travels and final clock and from that they have Total mileage and business mileage figure.

jennifernil

If he is using his own car for business travel, should he not be calculating business miles @ 40/25 ppm and deducting what employer paid for fuel in total to see if he has tax to pay or relief to claim?

Any

jennifernil wrote: »

If he is using his own car for business travel, should he not be calculating business miles @ 40/25 ppm and deducting what employer paid for fuel in total to see if he has tax to pay or relief to claim?

I have never in my 10 years seen it done that way but theoreticaly it could work - it would make sense..

It has probably not been done that way because all the guys in our offices had car allowance - but of course since I had confirmed that even on car with car allowance you can claim 40p/25p for used fuel..

Never tested it with HMRC, but as I say it would make sense. Not that HMRC always does make sense..

Employer will still have to report the total fuel on P11D though and OH's husband then write them a letter.. He could do this calc in his letter.
Still needs a mileage log too.

IMO it would be easiest/most sensible just to pay back private mileage in monthly payroll and never get taxed on anything TBH. But that depends also on amount of mileage done - it might work better financialy to do the 40ppm claim and the hassle (unlikely HMRC will change tax code back in the same month) could be worth it.

jennifernil

It is well worth claiming the 40/25ppm relief. That is after all what you are entitled to under HMRC rules.

If we look at doing 15k annually, 10k business/5k private, and assume a car averaging 30mpg.....

At todays prices (say £1.30 per litre) then the total fuel spend would be approx. £2955.

So each mile is costing 19.7p just in fuel. The employer is paying nothing towards "wear and tear" etc.

If you get a car allowance in return for not taking a company car, you would probably need all that to finance the purchase of the car, and any such allowance would be taxed as salary.

So, going back to the OP......

I suggest you claim the relief on the 40/25ppm basis as allowed by HMRC. For 10k business miles, you are allowed to receive £4000 tax free.

A. If the employer makes you pay back your private fuel, then the amount received from them tax free would be (in the example above) £1970

Or

B. If the private fuel is not repaid, obviously £2955

So claim A to HMRC is (£4000 - £1970) x tax rate, if 20% then tax relief of £406.

Claim B would be (£4000 - £2955) x tax rate, if 20% then tax relief of £209.

If the proportion of private to business is greater, then there comes a point at which you would be in "profit" and have tax to pay.

When my husband was working, this is exactly how his business miles were done, quite straightforward.

And, yes, you MUST keep accurate records.

You would need to do this via a Tax Return each year, though HMRC will usually also do something with your code to at least partly incorporate any relief due.

To get it 100% correct, you need the Tax Return, and for the amounts involved, it is worth getting it right.

As my husband never had a fuel card, I have no idea whether there is any tax implication in having one, like there is when you have a company car. He always paid all his fuel and claimed it back via expenses.