Company car - employer paying over advisory fuel rate

Prettynormal

First post.

Today I have had my most recent expenses paid back, including business mileage for my company car for the past month. I received an email with it saying that they had noticed they had been paying me back at a rate above the advisory fuel rate: 25p per mile instead of the governments advisory fuel rate of 11p per mile.

Within the email they suggested that they will assess previous claims dating back to April 2018 and compare them against the relevant AFR to understand the figure that I have been paid above AFR. They will then submit this figure on my P11D.

On the basis I didn’t set the 25p per mile rate (they did), and I have merely followed by the rules and procedures set out by my employer, I feel a bit put out that they seem to be suggesting I will now carry forward some kind of BIK deficit due to their inability to properly manage company car business mileage repayment.

Am I wrong to think they should sort this out in such a manner that it doesn’t directly penalise me in 2019/20?

Ps. They didn’t apologise at all.

Any advice gratefully received, thanks

unholyangel

Unless your car does around 25mpg then you have in fact profited rather than simply reimbursed and as such, its a BIK and needs to be reported.

You're still entitled to the 25p per mile from your employer if thats what your contract states/you agreed - you'll just have to pay tax on the amount above the AFR.

Nothing stopping you from asking your employer if they will cover the cost and only pay you the AFR in future though.

AdrianC

This isn't about them. It's about the taxman and his rules. The employer have simply been paying you at a rate that should be taxable above 11p - you've not been paying the tax you should have been paying. They need to get that underpaid tax back off you, and make sure you pay the right tax going forward.

https://www.gov.uk/government/publications/advisory-fuel-rates/when-you-can-use-advisory-fuel-rates

However they work it, you're still far better off than if you'd just been paid 11p/mile.

Bigphil1474

OP, sounds like they're saying they've paid you the 25p/mile but haven't correctly taxed it. Not 100% on the rules for company cars (I use my own car and get lump sum and mileage at 41p a mile), but if you were paid 25p a mile, and you are allowed 11p a mile tax free, then you just owe tax on the difference. For 20% tax band, that works out at 2.8p per mile, or about £28 for every 1,000 miles. You'll probably get a letter from HMRC saying your tax code has changed, and your tax free allowance will go down by £5 for every £1 you owe (in 20% tax band).
As you owe it, they'll want it, and the normal way it is sorted is by adjusting subsequent tax payments.