Fuel Benefit

wizzer

I've been to the Inland Revenue site but can't make head nor tail of it! I must be thick.

I use my own car for company business (first time) and my employer pays for both business and personal fuel. Never had a company car.

How do I calculate the amount of tax I will pay?

Any advice gratefully received.

donnalou

Do you get a car allowance or do they just for fuel?

wizzer

donnalou wrote:

Do you get a car allowance or do they just for fuel?

No car allowance - just fuel.

reddevilled

wizzer wrote:

No car allowance - just fuel.

As you do not have a company car you will not have a fixed rate benefit, instead you will be taxed on the private fuel your employer reimburses.

It may be that you are taxed on the full amount and it is up to you to make a claim for the business element either via your tax return (if applicable) or by notifying the Revenue.

Either way the end result should be that you do not pay tax on your business fuel but do on your private fuel.

HTH

wizzer

reddevilled wrote:

Either way the end result should be that you do not pay tax on your business fuel but do on your private fuel.

HTH

So it is a true benefit. For every pound I spend on private fuel (excluding the business miles) I pay 40p tax (higher rate) but benefit from the 60p?

donnalou

Do you work for a big company? Will they declare that they pay your private mileage?
My previous company didn't declare it. So I was quite lucky as I've heard the taxman can really sting you on it.

wizzer

donnalou wrote:

Do you work for a big company? Will they declare that they pay your private mileage?
My previous company didn't declare it. So I was quite lucky as I've heard the taxman can really sting you on it.

Yes big company - does things properly!

reddevilled

wizzer wrote:

So it is a true benefit. For every pound I spend on private fuel (excluding the business miles) I pay 40p tax (higher rate) but benefit from the 60p?

Yes, you are basically only paying 40% of what your private fuel costs - well a bit less because of the 1% NIC charge

wizzer

reddevilled wrote:

Yes, you are basically only paying 40% of what your private fuel costs - well a bit less because of the 1% NIC charge

Well on that note I'll go to bed a happy man tonight!!

cash99

Work on the basis that all the fuel is taxable then deduct 40p per mile for the first 10,000 miles and 25p per mile for mileage after that. The net result will be the tax you owe, or more likely, unless you do very high private mileage the tax you are due back.

withabix

Some of the replies here are not correct.

If you receive private fuel, this will be taxed as a benefit. Basically speaking, the total amount spent on ALL fuel will bed taken off your tax code next year, as your employer will submit a P11d to the IR. The only way to recover tax relief on your business mileage is to submit a Tax Return.

To do this, you wil also need to keep a good log of all of your business mileage, as the money spent on business fuel will also be shown on your P11d as a taxalbe benefit.

You will be required to fill in a Tax Return.

Basically:

1) The money paid by your employer for ALL fuel will be advised to the IR on your P11d as a benefit (ie element of salary) in £s.
2) You claim tax relief on your BUSINESS mileage (ie all travel to temporary locations or business trips - if you work in a 'bricks and mortar' office, journeys to there from home are PRIVATE mileage). Subtract your private mileage from your business mileage and claim relief on the difference: Multiply the first 10,000 miles of this figure by 40p and the remainder by 25p and enter that figure as a BUSINESS EXPENSE. That will correctly increase your tax code by that figure, moving your 22% and 40% starting thresholds by the same figure, thus applying your tax relief correctly.
3) You will receive a tax rebate (or a positive code change) unless PRIVATE MILEAGE > BUSINESS MILEAGE, in which case you will receive a bill.
4) Your Tax Code for the next financial year will be set to match your Tax Return...and so it goes on.....

NB, if you are paid more than 40p/mile for the first 10,000 miles or more than 25p/mile for the rest, you will be taxed on the difference between what you are paid and 40p/25p. 40p and 25p are the IRAMR (Inland Revenue Approved Mileage Rates).

It doesn't matter if you drive a car with high or low fuel consumption, it's 40p and 25p irrespective of whether it's a Smart or a Bentley. Sorry!