Car allowance and mileage

subway98

Hi, newbie here.

So I’ve just joined a company and was sold by the generous car allowance of £7k.

I was also under the impression that petrol expenses would be paid at 45ppm. However the employer is only paying 11ppm.
I understand I can claim the rebate at the end of the year, but what an ache that’s going to be. Anyway, I’ve heard they want my receipts for my petrol so they can claim my vat back. Are they allowed to do this, even though they’re only paying a nominal 11p back?

2nd question, what exactly does hmrc say car allowance covers, as I’m averaging 2000 miles a month, paying out £350+ in petrol. Getting back in expenses around £220 for those 2000 miles. Leaving me with around £340 a month for services, insurance, road side cover, brakes & tyres etc. So is that supposed to be covered under Car Allowance???

Sorry, long thread

ian103

The car allowance is taxable so you will only get 80% or 60% of that figure depending on your tax rate. Hmrc effectively class the car allowance as additional pay.



You can then claim the difference between the hmrc approved rates 45p for the first 10000 miles and I think its then 25p thereafter and the 11p they are reimbursing you, Again you will only get the equivilant of 20% or 40% dependant on your tax code.

SuzieSue

They shouldn't be claiming back the whole amount of VAT on the fuel invoice. They should only claim back the VAT on around 11p/14p/22p per mile as shown in the following:

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


They are paying you 11p a mile as that is what the government says is the cost of the fuel you car uses per mile if it is 1400cc or less.

They are paying you a car allowance to allow you to buy and maintain your vehicle and so they are only willing to pay you 11p a mile.

That is probably fair because most employees don't get a car allowance.

LandyAndy

SuzieSue wrote: »

They shouldn't be claiming back the whole amount of VAT on the fuel invoice. They should only claim back the VAT on around 11p/14p/22p per mile as shown in the following:

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


They are paying you 11p a mile as that is what the government says is the cost of the fuel you car uses per mile if it is 1400cc or less.

They are paying you a car allowance to allow you to buy and maintain your vehicle and so they are only willing to pay you 11p a mile.

That is probably fair because most employees don't get a car allowance.

The rates in that link are for employees using a company car. The OP is using their own car.

molerat

The company can reclaim the vat on the advisory fuel rate but they need be able to provide vat receipts for that amount, where those receipts come from and whether they relate to a particular employee claim is irrelevant.

The rates in that link are for employees using a company car. The OP is using their own car.

The company obviously feel they are effectively providing the car so only pay the advisory rate, op can reclaim the tax on the difference though.

SuzieSue

LandyAndy wrote: »

The rates in that link are for employees using a company car. The OP is using their own car.

But that is the amount that you can reclaim VAT on regardless of whether the employee is using their own car or a company car.

My employees get 45p a mile as they use their own car, but we can only reclaim VAT on the 11p.

jaybeetoo

https://www.gov.uk/tax-relief-for-employees/vehicles-you-use-for-work

Woody37`

Hi,

Had a company car for 18 years. Now deciding on whether I should give it up. I currently do not have an option of a cash alternative in my contract of employment. However my boss is keen for me to not have the company car. So my question is how is my additional salary calculated?

My Passat cost £24k. They never lease it is always purchased outright. They provide me fuel at about £3k per year and the NIC say is £1100.

I get a new car every 3 years or 60,000 miles. My private mileage is high at about 15k with 5k business miles.

Over 3 years the car costs the company £24k car +£9k fuel + £3300 NIC = round that to £36k.

So do i simply divide that cost into 3 and arrive at £12k?

Any help appreciated.

Drew

Car_54

subway98 wrote: »

Hi, newbie here.

So I’ve just joined a company and was sold by the generous car allowance of £7k.

I was also under the impression that petrol expenses would be paid at 45ppm. However the employer is only paying 11ppm.
I understand I can claim the rebate at the end of the year, but what an ache that’s going to be. Anyway, I’ve heard they want my receipts for my petrol so they can claim my vat back. Are they allowed to do this, even though they’re only paying a nominal 11p back?

If they are to claim back VAT they'll need the receipts (or copies?). Whether they can claim all of it, or part, is their problem, not yours.


Can they do this? Well, they're the ones paying you the generous allowance. If you don't want it ....



If someone gave me £7 kpa they could have all the receipts they want

MX5huggy

Woody37` wrote: »

Hi,

Had a company car for 18 years. Now deciding on whether I should give it up. I currently do not have an option of a cash alternative in my contract of employment. However my boss is keen for me to not have the company car. So my question is how is my additional salary calculated?

My Passat cost £24k. They never lease it is always purchased outright. They provide me fuel at about £3k per year and the NIC say is £1100.

I get a new car every 3 years or 60,000 miles. My private mileage is high at about 15k with 5k business miles.

Over 3 years the car costs the company £24k car +£9k fuel + £3300 NIC = round that to £36k.

So do i simply divide that cost into 3 and arrive at £12k?

Any help appreciated.

Drew

No, because the Passat still has value at 3 years and 60000 miles. At a guess 40 to 50 percent of the £24k so the annual cost is £8k on your calculation.

How much is a lease on a Passat for 3 yrs at 20000 miles per year? That’s how much salary you need, then you get a 7 year old mx5 as your car and don’t look back.

subway98

Thanks for all the replies. So last week I put £150 fuel in my car, covered 700miles with some left over. Put my mileage expenses in and I!!!8217;m due £70 back.
The £7k pa is taxed. I deduct the £80 not reimbursed for work fuel from that per week and you can see that generous £7kpa isn!!!8217;t so generous once you split it down.
Two sets of tyres needed pa. two services. An MOT and uplift business insurance. Per week that £7k is approx £107 per week.

I!!!8217;ve been advised not to give VAT receipts for fuel.