Help - fuel scale charge?

adencool

Hi

I have a co financed lease car from the council, i pay £100 a month for the car.

In the next few weeks im being redeployed, and need to travel an extra 20 miles each way to work.

Thou i can claim for these miles, the form states:

Non-business miles - redeployment miles. Payment in respect of such jorneys give rise to a fuel scale charge, which will result in a tax liability and you must decide weather its in your best intrest to claim



Can anybody explain this for me, im not a accountant so a bit stuck. But as far as i can see its about claiming vat back, which is what not what im doing

jimmo

I assume your redeployment is a "permanent" move, not a "temporary" one.
In this context a temporary move can be anything up to 2 years (the 24 month rule). Anything more than 2 years is classed as permanent.
In my days as a Civil Servant, and I am pretty sure the same applies today, when Civil Servants, Local Government and NHS employees were transferred to a new workplace further away from home they were entitled to either a relocation package or Excess Fares Allowances.
Relocation packages have their own tax rules. Excess Fares Allowances do not.
Therefore, on the day that you start to work at your new "permanent" workplace your journey from home to work will become your normal commuting journey, not a business journey and not allowable for tax purposes.
Employers therefore have to tax Excess fares Allowances along with pay.
You have the added complication of having a company car and, under the car fuel benefit rules, even if your employer only contributes a single penny towards your private fuel in the tax year you get hit, by the taxman, with a full year's fuel benefit charge.
That is what your employer is on about.
It seems to me that your employer is quite prepared to pay you Excess Fares Allowance. If your journey to work were by public transport or in your own car you would pay tax on that. However, because you have a company car, instead of paying tax on the amounts actually paid to you, you will be required to pay tax by reference to the car fuel benefit scale rate appropriate to your car.
At this point, you foregoing your entitlement to Excess Fares Allowances could be a very wise move if you are driving what HMRC perceive as a gas guzzler with a very high fuel benefit scale charge.
On the other hand, if you drive a green machine with a very low fuel benefit scale charge you could well shoot yourself in the foot by foregoing your entitlement to Excess Fares Allowance.

adencooled

so from the data i have found:

CO2 band VAT fuel scale
charge 12 month
period, £630.00
VAT on 12 month
charge, £105.00
VAT exclusive 12
month charge, £105.00
120 or less

http://www.hmrc.gov.uk/budget2011/overview.pdf#page=233

(note the car is a c4 diesel at 12- c02)

so total mileage extra a day is 23 miles @ 11p = £2.53

total for year - approx £607.2 (this is assuming i go to the new office every week day, and not straight to a clients house)

so if i claim this im out of pocket by £23


Is this right?

zygurat789

The fuel scale charge is a VAT item payable by VAT reistered traders. If you are not VAT registered it doesn't apply to you.
If you are VAT registered then you may claim the input VAT of the derv and pay the appropriate scale charge or you may decline to claim the inpput tax on the derv.