Car Fuel Benefit

meltonred

First Post
Hello,
I have a company car and take the option of 'free fuel' using my company credit card.
ALL my private miles are paid for.
I have calculated that my private miles are so small the tax I pay in FUEL CAR BENEFIT ( £4972) I would be better off by opting out of this scheme.
SO , my question.... the £4972 I pay in tax wont be deducted from my pay over the year ???
OK, I will pay my company for my private miles but basically I wont have £4972 deducted from my pay each year ?


Regards

loskie

are you sure that you have £4972 deducted? It's more likely that you are baying income tax on a benefit of £4972 ie 20% or 40% of that

Bigphil1474

OP, loskie is probably correct. If you are looking at your P11D it will have somewhere about your taxable benefits, and your tax free allowance will be adjusted based on that. It won't just be the fuel, there will be an element for having a company car as well. The technicalities of company cars are a bit beyond me, as I am grey fleet (my own car) but if you are paying nearly £5k in tax for having/using the car, then there's something amiss.

owen_money

Unless you do a lot of private mileage its not worth having , it costs a lot

AdrianC

As said - the £4,972 is the value of the benefit. That's considered to be paid to you in the form of petrol, and £4,972 "added to your salary" for tax calculation via your PAYE code. If you're a 40% taxpayer, it'll be costing you £1,988/year, if you're on 20%, it'll be costing you £994. If it takes you across the line between the two, then obviously somewhere between...

So the question is how much you actually spend on private fuel? If it's more than that tax amount, then keep the benefit. Otherwise, thanks but no thanks.

The £4,972 figure is calculated by taking the car's CO2-based percentage figure and multiplying it from the base benefit figure. For FY17/18, that's £22,600 x 22%, so your co.car is going to be 115-119g CO2?

After April, the figures change - the same car will be £23,400 x 24%, so the benefit will be based on £5,664. That's an extra £140 tax on 20%, twice that on 40%.

https://www.rossmartin.co.uk/employers/benefits-in-kind/611-car-fuel-benefit-charges
https://www.rossmartin.co.uk/employers/benefits-in-kind/242-c02-emissions-appropriate-percentages

MidlandsGlory

Everyone I know with a company car (a lot!) opted out of it at least 10 years ago as it wasn't worth the benefit even then, its kept going up ever since too.

Its one of those things where the taxman bites his own nose off, It used to bring in the government a nice earner but they got too greedy and racked the rate up and up until most opted out and the taxman is left getting nothing instead. Stupid.

meltonred

Great reply , thank you .
I get it now ...
So the £1998 a year div x52 =£38.42 . if I spend less than this figure per week on private fuel its better to opt out??
just one other question is it 11 or13p per mile for private miles ?
I have the standard Vauxhall Insignia 2.0.

DoaM

Reimbursable mileage rates will be defined in your company car policy and expenses system. (If you opt out of private fuel then you will claim business miles, not private miles). If what they offer is less than the government rate then you can claim the balance as a tax adjustment at the end of each financial year (when the tax returns are done).

Where has £1,998 suddenly appeared from? It was £4,972 in your OP. (£1,998 is 41.7% of £4,972). Or is £4,972 made up of £2,974 car allowance and £1,998 fuel allowance?

Assuming £1,998 is correct for fuel, and is the tax equivalent value that you're paying per year, that equates to £38.42 per week. If you are spending less than that on fuel (equates to about 31 - 32 litres of fuel at around £1.20 ish per litre, an estimate of 300 private miles per week at 45 mpg) then opting out may be worth it ... if you're spending more then staying in may be worth it. Only you can do the sums.

Note: unless your company car policy says otherwise, commuting to your normal place of work counts as private miles.

meltonred

Thanks again for the reply..
The £1998 ? isn't that the figure Adrian C came up with ' form of petrol' ?
Quick question again , a lad has opted out of the private fuel scheme .
We record our mileage on a daily trip , at the end of the month we have a private miles and business miles total , the engineer (say his private mileage is 80 miles) he times 80 by 13p £10.40 then gives our accounts department the £10.40 . Are you saying this is wrong?.

DoaM

No. I'm saying the amount to be paid (or claimed) depends on what the company car policy states. Government HMRC rates are strangely enough defined by the government.

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016

If your mate is using 13p per mile then his vehicle must be 2001 cc or greater (assuming diesel). Remember that your 2.0 litre Insignia will probably be 1998 cc, so 11p per mile.

Bigphil1474

OP, as DoaM says - commuting to normal place of work is personal miles, but also remember that if you are travelling straight from home to a client, that is now classed as work time for working hours purposes, but not necessarily as work miles - not sure if it is down to company policy or govt. rules. Where I work, if we travel straight to a job from home, we get the miles of the journey minus our normal commute miles (if there are excess miles). The normal commute miles then go down as 'miles not reimbursed', which in theory can be claimed back at the end of the year, but you need to do a lot to make it worth the hassle.