Company Car / Fuel Benefit?

Lisa1978

Morning all,

I have been advised that i shall be getting a company car in the next few weeks. I live approx 5miles away from work and on average do a total of 7k miles/year. Of these approx 2k will be business. I am office based with approx 3 days a month out on business.

Firstly am i better off with the company car (I have been offered a VW Golf 1.6 Bluemotion) or a car allowance of approx £5k/year.

Also, when using 'company car calculators' it asks whether to include/not include fuel benefit. Could someone kindly explain whether i should or shouldn't take this 'benefit' as if i do include it the tax to me changes from approx £40/month cost to £85/month if i do tick it.

Thanks in advance

Turboted

Hi,

I'm not an expert on tax and I haven't posted here before but I might be able to offer some advice based on experience.

I had a company car for a couple of years and as i only lived 4 miles from work I chose not to have the fuel benefit although business mileage was paid by the company.

The company then got taken over and my position changed so I came out of the car, I called the tax office and believed it was all sorted when my tax code changed at the end of the financial year.

Two years later (last January) I recieved a letter from the tax man saying I had under paid tax for the time I had the company car. This comes down to when I had the car and I hadn't paid tax on the fuel benefit. I said hang on, I didn't get fuel benefit as I paid for all my personal fuel.

The taxmans point of view is that if theres enough fuel in the car to get you from your last business appointment to the petrol station to buy your personal fuel then thats a benefit and you have to pay the tax in full so it was put on my P11D.

Its causing me massive grief and I'm still trying to get my P11D ammended as I'm now paying tax on something I haven't had.

I would check with your company exactly how the tax will work if you chose not to have the fuel benefit if you're going to go ahead with the car. It may different depending on what sort of company you work for, I work at a car dealership.

If I was in your situation I would either pay the fuel benefit and do as many personal miles as possible to make it worthwhile or take the 5k allowance. You can buy alot of car for that money these days if you look around the used car market, but if you're using it for business make sure you tell your insurance company.

Hope that helps..

golum81

Hi,
I just wanted to offer my thoughts on your situation.

The Fuel Benefit will be more beneficial if you do alot of private miles.

It is a flat charge which takes the HMRC figure of £20,200 (2012/13) multiplied by your CO2 %, which I think for the car you are quoting is 10%.

From what I could find, it has CO2 emissions of 99g/km - which makes it just able to qualify for the 10%.

So you fuel benefit would be £2020 per year - which you would suffer the tax of 20% or 40%.

From your own post, the difference between having the fuel benefit and not having it is £45 p/m. I guess the question is, if you did no business miles, would you spend this much in petrol per month.

If you would spend more than this, then it is probably a good idea to go for the benefit as you would pay more if you were paying it out of your own back pocket.

But please note, that if you make a "contribution" towards the private miles then you still get taxed for the full fuel benefit as if you haven't made any contribution. You would have to reimburse your employer for ALL of your private miles to not qualify for fuel benefit. (which means you'd probably have to complete a mileage sheet to keep records)

Also, it might be worth finding out if your employer is going to pay ALL of your fuel costs - as not everyone does. My company insists on reclaiming the private miles. The employer has an additional charge - the fuel scale charge - if it pays for it's employees private miles.

Hope this helped...

rs65

Lisa1978 wrote: »

Could someone kindly explain whether i should or shouldn't take this 'benefit'

Is your employer offering it?

Dal_Whinnie

rs65 wrote: »

Is your employer offering it?

Not all companies offer the fuel benefit as well as providing a company car. If they are only offering the car then you only need to worry about the car benefit which (assuming the co2 emissions are 99) would be 10% of the list price (approximate) increasing to 11% next year and 12% the year after.

Lisa1978

Thank you, appreciate all the replies. Some interesting reading

After further talks with my MD, i have be advised that the car is 107 Co2 emissions, therefore as i am a 20% tax payer the tax is only approx £42-£50/month. I enquired regarding the fuel benefit and I pay for all private fuel, the company pay for business miles only.

Are there any National Insurance implications?

Thanks

Dal_Whinnie

Lisa1978 wrote: »

Thank you, appreciate all the replies. Some interesting reading

After further talks with my MD, i have be advised that the car is 107 Co2 emissions, therefore as i am a 20% tax payer the tax is only approx £42-£50/month. I enquired regarding the fuel benefit and I pay for all private fuel, the company pay for business miles only.

Are there any National Insurance implications?

Thanks

As far as I am aware there is additional NI for your employer to pay but not for you