Fuel Card with Private Car
Discussion
Hi there,
I'm really struggling to understand my tax circumstance for fuel and would really appreciate any help. I've been told I need to fill in a tax self assessment for the last 2 years and I'm getting conflicting advice from HMRC and my employers accountant as to how my fuel should be dealt with.
- I use my own car for work
- My employer pays for all my fuel (business and private) through a credit card they pay off each month
- I record my business miles/spend
- I have no P11D
- I have a monthly 'car allowance' that is taxed at 20%
My employer says my fuel "is not a Mileage Allowance Payment and is treated as a reimbursed business mileage expense within HMRC rates. If the business mileage claim is higher than the total (business and private) fuel costs then there will be no additional tax or Class 1 National Insurance payable by the employee or company and no P11D required."
I think if this is the case then they are considering the payments as "Relevant Milage Expenditure". Is that correct?
HMRC on the other hand say that the fuel for my personal use should be considered as a BIK and that I should have a P11D. I pointed out this should be for company cars only, but they disagreed and said it applied to private cars too. I'm still inclined to think they are incorrect on reading HMRC Guidance EIM25530.
So - if my employer is correct, am I entitled to any tax refund? If so how? Am I supposed to declare this anywhere on my self assessment?
Total fuel spend: £1750.09
Business Mileage: 7520
Private Mileage: 7155
This means the 'qualifying allowance' is £3,384 at the 45p rate.
If I had paid for the fuel myself and been reimbursed I understand I would have been able to 'claim' 45p/mile based on contributions from my employer and Mileage Allowance Relief. Therefore I would have received £3,384 from my employer/rebate from HMRC. If I subtract the fuel spend I would essentially have received 'free fuel' and £1633.91 in 'cash'.
If I am not able to claim tax back in my current situation I am only receiving the free fuel, meaning I'm out of pocket of the 'cash' of £1633.91. Is this correct?
Many thanks for any help you can help to solve this pickle! :-D
I'm really struggling to understand my tax circumstance for fuel and would really appreciate any help. I've been told I need to fill in a tax self assessment for the last 2 years and I'm getting conflicting advice from HMRC and my employers accountant as to how my fuel should be dealt with.
- I use my own car for work
- My employer pays for all my fuel (business and private) through a credit card they pay off each month
- I record my business miles/spend
- I have no P11D
- I have a monthly 'car allowance' that is taxed at 20%
My employer says my fuel "is not a Mileage Allowance Payment and is treated as a reimbursed business mileage expense within HMRC rates. If the business mileage claim is higher than the total (business and private) fuel costs then there will be no additional tax or Class 1 National Insurance payable by the employee or company and no P11D required."
I think if this is the case then they are considering the payments as "Relevant Milage Expenditure". Is that correct?
HMRC on the other hand say that the fuel for my personal use should be considered as a BIK and that I should have a P11D. I pointed out this should be for company cars only, but they disagreed and said it applied to private cars too. I'm still inclined to think they are incorrect on reading HMRC Guidance EIM25530.
So - if my employer is correct, am I entitled to any tax refund? If so how? Am I supposed to declare this anywhere on my self assessment?
Total fuel spend: £1750.09
Business Mileage: 7520
Private Mileage: 7155
This means the 'qualifying allowance' is £3,384 at the 45p rate.
If I had paid for the fuel myself and been reimbursed I understand I would have been able to 'claim' 45p/mile based on contributions from my employer and Mileage Allowance Relief. Therefore I would have received £3,384 from my employer/rebate from HMRC. If I subtract the fuel spend I would essentially have received 'free fuel' and £1633.91 in 'cash'.
If I am not able to claim tax back in my current situation I am only receiving the free fuel, meaning I'm out of pocket of the 'cash' of £1633.91. Is this correct?
Many thanks for any help you can help to solve this pickle! :-D
All that you need to do on self assessment is put cash value of the amount of fuel paid for by employer in "benefits" section - this is added to your taxable pay to pay tax on
you keep records of your business miles then claim back at 45p for first 10K and 25p thereafter e.g. 10000 miles = £4500 expense to you
then you put the workings out in "other expenses" e.g car reg, total bus miles for year = 12500. 10000 @45p + 2500@25p = 5750
put the £5750 in "other expenses", you get tax relief on that value
thats it, you have effectively paid some tax on the private mile petrol benefit
you keep records of your business miles then claim back at 45p for first 10K and 25p thereafter e.g. 10000 miles = £4500 expense to you
then you put the workings out in "other expenses" e.g car reg, total bus miles for year = 12500. 10000 @45p + 2500@25p = 5750
put the £5750 in "other expenses", you get tax relief on that value
thats it, you have effectively paid some tax on the private mile petrol benefit
EIM25530 (http://www.hmrc.gov.uk/manuals/eimanual/eim25530.htm) appears to say beyond doubt that the fuel benefit cannot apply to you - HMRC have been known to get things wrong when you ask them what to do though so I would be relying on what it says in EIM25530 - that seems to suggest that the precise means by which the employer pays. And I speak as someone who as an employee did have a fuel card with a private car, though I had to repay private mileage at the actual rate of pence per mile fuel used each month
Car mileage paid by employer (whether by fuel card as here or in more general by pence per mile) should be extremely simple to calculate - people often seem to massively overcomplicate it and I really don't know why:
1. how many business miles did you do in a tax year? Multiply by 45p (assuming under 10,000 - if over then 45p for first 10,000 and then 25p)
2. what did the employer pay you or what fuel did it buy?
Compare the two and that's your answer - if 1 is more than two you can claim a deduction in your tax return for business mileage. If it's the other way round that might be more of a problem as there are national insurance implications I think where you get paid more than the proper fuel allowance
And your employer if paying the full fuel bill without checking is taking a risk with its tax/NIC liabilities - if you did huge private mileage it could be causing really big problems for itself with HMRC - but that doesn't seem to apply on your figures
Car mileage paid by employer (whether by fuel card as here or in more general by pence per mile) should be extremely simple to calculate - people often seem to massively overcomplicate it and I really don't know why:
1. how many business miles did you do in a tax year? Multiply by 45p (assuming under 10,000 - if over then 45p for first 10,000 and then 25p)
2. what did the employer pay you or what fuel did it buy?
Compare the two and that's your answer - if 1 is more than two you can claim a deduction in your tax return for business mileage. If it's the other way round that might be more of a problem as there are national insurance implications I think where you get paid more than the proper fuel allowance
And your employer if paying the full fuel bill without checking is taking a risk with its tax/NIC liabilities - if you did huge private mileage it could be causing really big problems for itself with HMRC - but that doesn't seem to apply on your figures
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