Company Car Tax - Confused!
Options
LenchBentley
Posts: 1 Newbie
in Motoring
All,
I have been trying to work out my options in relation to using my personal car for business use. I turned down a company car to take benefit of a £685 a month Car Allowance as I heard you can get taxed quite heavily on Company Cars.
I bought a 1 year old BMW 3 Series 2.0D Sport for my new job and started paying for my own fuel, under the impression that I could claim back 45p per mile for the 1st 10,000 miles & then 20p thereafter.
Having put in my first expenses claim for 190 miles I was advised that as I was receiving the car allowance which covers depreciation etc. I could only claim 15p per mile on this trip. Furthermore, they have given me a company credit card and told me to use this for ALL fuel purchases going forwards.
My understanding is that any personal miles will be paid for under a tax bill at the end of the year, which is a 'Benefit in Kind'. This was the kind of tax I was looking to avoid by taking the car allowance and claiming back at 45p per mile. My understanding is that now my personal miles will be taxed subject to the normal company car multipliers for C02 emissions etc.
For the life of me I cannot work out what tax implication this will have. Am I loosing out majorly by not claiming the business miles back from personal fuel purchases? Under HMRC should i not be able to claim 45p per mile from my employer, whatever my car allowance is? Do I insist that I claim the 15p per mile from the employer by buying my own fuel and then claim a tax allowance from HMRC in my tax return for the remaining 30p per mile?
I am so confused. Any help would be greatly appreciated!
Thanks,
LB
I have been trying to work out my options in relation to using my personal car for business use. I turned down a company car to take benefit of a £685 a month Car Allowance as I heard you can get taxed quite heavily on Company Cars.
I bought a 1 year old BMW 3 Series 2.0D Sport for my new job and started paying for my own fuel, under the impression that I could claim back 45p per mile for the 1st 10,000 miles & then 20p thereafter.
Having put in my first expenses claim for 190 miles I was advised that as I was receiving the car allowance which covers depreciation etc. I could only claim 15p per mile on this trip. Furthermore, they have given me a company credit card and told me to use this for ALL fuel purchases going forwards.
My understanding is that any personal miles will be paid for under a tax bill at the end of the year, which is a 'Benefit in Kind'. This was the kind of tax I was looking to avoid by taking the car allowance and claiming back at 45p per mile. My understanding is that now my personal miles will be taxed subject to the normal company car multipliers for C02 emissions etc.
For the life of me I cannot work out what tax implication this will have. Am I loosing out majorly by not claiming the business miles back from personal fuel purchases? Under HMRC should i not be able to claim 45p per mile from my employer, whatever my car allowance is? Do I insist that I claim the 15p per mile from the employer by buying my own fuel and then claim a tax allowance from HMRC in my tax return for the remaining 30p per mile?
I am so confused. Any help would be greatly appreciated!
Thanks,
LB
0
Comments
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My company handles this differently. Whether you have a company car or receive an allowance, you have 2 choices:
1. Pay for fuel and then expense this for business trips per HMRC guidelines. As the vehicle is funded then fuel can only be expensed at the lower rate (e.g. 11p per mile for myself with a 1.6L diesel)
2. Purchase fuel on a fuel card and then (monthly) advise the total mileage and split between business and personal miles. Personal miles are then charged to the employee (deducted from salary) based on the HMRC lower rate.0 -
The 45p allowed by HMRC is a figure designed to cover all expenses incurred in using your own car, i.e depreciation, maintenance, insurance, etc. As well as fuel. In your situation, you have a car allowance to cover those, so any mileage allowance is to cover the fuel cost only. The amount is up to your employer, subject to your agreement (?).
BTW I may be out of date, but I seem to recall that if the employer provides ANY fuel for private use, it is taxable at the full scale rate (I.e. as if he paid all of it).0 -
Hi LenchBentley
As you have taken the cash allowance you are now outside the scope of company car tax so you should not worry about that.
Your company can pay you anything up to 45p per business mile without you having to pay any income tax, the 45p is to cover fuel costs, vehicle depreciation, insurance etc etc.
45p is the maximum they can pay but many companies pay less than that as they are covering the wear and tear etc in the cash allowance they have given you, this looks to be the case in your company's policy so the 15p a mile is to cover actual cost of fuel only and should more or less do that.
I think your concern is the private fuel now that you have to pay for all the fuel via a card, what will happen is the company should calculate the cost of the fuel you have taken for private use (total fuel cost minus business miles @ 15p) this is your taxable benefit, i.e. you have received £2000 worth of fuel you get taxed on the extra £2k (you pay PAYE and you and the company pay NIC).
Given the tax implications most companies would ask you to reimburse them for the private miles, this would be better for the company and worse for you so maybe not worth mentioning!
And after all that you can reclaim the tax on the (45p-15p) 30p per business mile that the company didnt pay you, you do this via your tax return.
This may help you understand the reasoning behind the company policy letstalkleasing.co.uk/news/advice/Company-Car-or-Car-Allowance0 -
Unfortunately Hmrc charge fuel benefit on a car value and emissions, exactly like you are taxed for the car itself. You will typically have to do a fairly high mileage to make this worthwhile so may be best to pay for your own miles.
You will then be able to reclaim the difference on what the company are paying for business mileage to Hmrc rates, in your case 30p; you only get the tax back on this though at either 20 or 40%, so it's actually 6 or 12p in your pocket.
If you don't do a tax return then you can simply advise Hmrc of the figures, by phone or by post, and they should then refund or amend your tax code as applicable.0 -
This is a good read, I have just got a promotion at work and they said it comes with a company car BUT as I have found out the rates I get are rubbish. They are saying around £180 per month for a company car or up to £150 for car allowance and then the fuel is the same as what LenchBentley has been told 11-12ppm. I can't afford any car from their list without added a PUC (personal usage charge) to top it up and dont think I can run my car which is on a £200 per month pcp for the £150 in my wage that then gets taxed. Dont really know what to do.
Sorry for hi-jacking the post0 -
Ask for the £150 extra as a salary increase rather than car allowance? That way you could continue with your current vehicle (using the additional salary to offset some of the PCP cost) and still be able to claim HMRC higher rates for business mileage.0
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So I guess they pay the 12ppm and I have to claim the tax only on the other amount up to 45p ???0
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This is a good read, I have just got a promotion at work and they said it comes with a company car BUT as I have found out the rates I get are rubbish. They are saying around £180 per month for a company car or up to £150 for car allowance and then the fuel is the same as what LenchBentley has been told 11-12ppm. I can't afford any car from their list without added a PUC (personal usage charge) to top it up and dont think I can run my car which is on a £200 per month pcp for the £150 in my wage that then gets taxed. Dont really know what to do.
Sorry for hi-jacking the post
Is there any restriction on what car you can drive with car allowance?
£150 is nothing as you need to pay tax on it.0 -
So I guess they pay the 12ppm and I have to claim the tax only on the other amount up to 45p ???
Only you can determine what the company will say/offer in respect of mileage claims. My comment was about getting a pay rise (instead of the car allowance) and then claiming mileage on the basis of a fully private vehicle (45p per mile) - IF the company allow it.0 -
I'll look into it more as I can only see a way that getting a car or using mine is going to cost me to do the role0
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