Tax relief - personal car for business - fuel issue

Stonedhouse

Hi

I'm in the process of approaching HMRC to claim back tax relief for using my own car for business use and I understand about being able to claim relief on the difference between what my employer reimburses me and the HMRC advisory rates of 45p for first 10,000 and then 25p for over and above that.

I get a monthly car allowance but that is fully taxed (I'm in the 40% bracket) so I understand that is not relevant to the mileage issue.

The slight complication is that my company give me a company credit card on which ALL fuel is paid for on that - we then submit milage sheets including private miles and they deduct out from our pay-packets the appropriate amount for private miles based on current fuel rates so that we do not get taxed for having fuel for private miles covered by the company. No other mileage payment is then made.

My question is - when claiming Tax relief do I class the difference between employer payments and HMRC approved rates as the full 45p / 25p amount as I don't get a mileage rate reimbursement ? or do I need to include the equivalent of what the company covers for business miles by having fuel paid for directly by the company - which based on average fuel costs and economy is 11p and therefore I can only claim 34p / 14p?

The reason it is done this way is that they usually provide company cars to their other employees but they offered to accommodate me having an existing car on a PCP deal which tailed over from my previous employment and I don't want to disrupt them having to do a special fuel process for me. That also works for me as I don't rack up a hefty personal credit card bill for a lot of business miles.

Ideally I would like to claim the Tax relief based on the full 45p/25p as I do approx 25,000 miles a year and the car allowance I get only covers 3/4 of my PCP monthly amount and then on top I have to pay for service, tyres, insurance, GAP insurance and also put away for a £1,000 deposit should I wish to do another PCP deal in 3 years time - that all works out at about £200 - £250 a month so any extra help is greatly needed.

Many thanks

k3lvc

Stonedhouse wrote: »

Ideally I would like to claim the Tax relief based on the full 45p/25p as I do approx 25,000 miles a year and the car allowance I get only covers 3/4 of my PCP monthly amount

Of course you would - but that's not how it works.

IIRC your company pays for all fuel and then deducts x pence per mile for private use ?

If this is the case then presumably you'll need to get to the year end, divide what they've paid by the number of business miles done and then you can claim tax relief at the appropriate rate on the difference.

Over the course of the year your business rate per mile will differ if they're paying a variable price for fuel and a variable MPG but then charging you at a fixed rate for private mileage

00ec25

you work in amounts paid

total value of fuel purchased via the card £x
total (gross, pre tax) amount deducted from your wages in respect of private fuel £Y

£x - £y = is the total amount you received as business fuel £B

using your mileage log you calculate your business only mileage at 45ppm and 25ppm as applicable. Come up with a total value at the approved rate £A

£B - £A will be the value of business mileage you can claim since part of it has obviously already been paid to you.

If £B is more than £A then your have been overpaid and that should be declared by your company on a P11D as a taxable benefit given they are paying for all fuel to start with, and therefore the employer has a duty to do this calculation anyway.