Company fuel card/private car

Company fuel card/private car

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Discussion

Deva Link

26,934 posts

245 months

Wednesday 24th February 2010
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bogie said:
if you do 10,000 business miles you get £4000 back if its a pure expense

its only offset if your employer has paid you in addition in some way ie.. fuel card, mileage rate or such like

if your employer doesnt give you anything and you 10K business miles, you get £4000 back, not £1600

if you employer pays you £100 a month, so £1200 a year and you do 10K bus miles, you get £4000-1200 = £3600 back

you are incurring expenses without being fully reimbursed, so you dont pay tax at all on the expense amount

...at my company, to keep it simple, they just give us fuel cards, and we sort out our own tax - it saves them the overhead of adminstering mileage claims for loads of sales staff ...
Dream on - if it was repaid in full then why would any employer pay a mileage allowance!

It's not treated as an expense. It's mileage allowance.

You used to be able to claim the actual cost of running the car but that stopped years ago.

bogie

16,386 posts

272 months

Wednesday 24th February 2010
quotequote all
oh well, maybe ive been doing my tax return wrong for the last 10 years then LOL ..silly me !

as my business miles go in the box for "expenses" and I usually get a fairly hefty tax return, even after Ive had free fuel all year

someone has to give you that .40p a mile allowance - either your employer or the tax man, for most, its a combination of them both, but ultimately you should get .40p a mile for every business mile travelled ...

if I do 20K business miles I get an extra £6.5K in my pay packet one way or another .....usually a mix of direct paid fuel and tax rebates in recent years

Anyway, Im not going to argue about it, I will just carry on as normal, just trying to explain how I do it wink

Eric Mc

122,038 posts

265 months

Friday 4th March 2011
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What's the problem?

40p a mile can be paid by your employer to you tax free for each work related journey you undertake in YOUR car. The rate drops to 25p over 10,000 work related miles.

a) it has to be in respect of your own personal car
b) they do not pay anything else to yuo in respect of funding the costs of your car

If they provvide you with a fuel card

a) do THEY pay all the fuel costs incurred@?

b) do they pay SOME of the fuel costs incurred?

c) do they pay NONE of the fuel costs incured?

If they pay ALL or some of the fuel costs incurred, there is a good chance that they are also funding your PRIVATE driving. You could, in this cae, be subject to a taxable Benefit in Kind.
To see if you are in this situation, you would need to work out your actual business mileage on the 40p/25p per mile basis and subtract from this amount the total paid by your employer for your fuel. If the employer paid less than the equivalent of 40p/25p per mile, you can make a claim for the underpayment from HMRC. If the employer paid MORE than the 40p/25p per mile, then you should be taxed on the excess paid by the employer.

Zip106

Original Poster:

14,700 posts

189 months

Friday 4th March 2011
quotequote all
First I've heard - perhaps Eric may know?

Eta - I was late replying, thanks Eric!

My wife has a card now but does little business miles.
We worked out being better off by paying the BIK on private fuel as we do about 70% of the annual mileage as private use. (even more so now with the cost of fuel)

This obviously would affect us by taking the car allowance ( no choice anymore at her company).

Edited by Zip106 on Friday 4th March 12:24

Eric Mc

122,038 posts

265 months

Friday 4th March 2011
quotequote all
No longer eligible for what?

Zip106

Original Poster:

14,700 posts

189 months

Friday 4th March 2011
quotequote all
From June when her co car lease runs out her company will no longer provide cars but will only give an allowance.
Originally, she was told that she could still have a fuel card.

Hence my o/p about the tax implications regarding this situation - her company can't seem to give a definitive answer.

Eric Mc

122,038 posts

265 months

Friday 4th March 2011
quotequote all
Zip106 said:
From June when her co car lease runs out her company will no longer provide cars but will only give an allowance.
Originally, she was told that she could still have a fuel card.

Hence my o/p about the tax implications regarding this situation - her company can't seem to give a definitive answer.
Under the new arrangements, she will be using her own car for business related trips. For those trips, HMRC will allow her to receive from her employer up to 40p per mile for each business trip she undertakes up to 10,000 business miles and 25p thereafter without any tax being due.

It looks like her employer is not going to be paying her on the basis of mileage claims that she submits. Instead, each month they will pay whatever is showing as outstanding on the fuel card.
If the amount the company pays exceeds what they would have paid if she HAD claimed 40p per mile, then she will be taxed on the excess.
If what they pay is LESS than the equivalent of 40p per mile, she can make an additional claim for the undepaid amount direct from HMRC.

Her car "allowance" is taxed as if it is additional salary. So, if her gross salary for the year was £30,000 and she recives an annual Car Allowance of £3,000, she will pay Income Tax and Class 1 NI on a Gross Salary of £33,000.00.

Zip106

Original Poster:

14,700 posts

189 months

Friday 4th March 2011
quotequote all
That makes a lot of sense, thanks Eric.
Unfortunately she's on the highest tax rate this year so it's going to be painful..

Eric Mc

122,038 posts

265 months

Friday 4th March 2011
quotequote all
Depends on how it works out. If her employer are paying for all her fuel (i.e. both business and private), then she will no doubt suffer a BIK on the fuel costs.

Zip106

Original Poster:

14,700 posts

189 months

Friday 4th March 2011
quotequote all
At the moment they pay for both and she's taxed as a BIK.
It worked out better for us that way.

fencer50

1 posts

156 months

Thursday 28th April 2011
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dont know if this helps but heres what happens with my company. I get an allowance, added to my salary and taxed as such which must pay for everything for the car, tax, servicing, tyres, insurance etc. I pay finance on a private car. I also get a fuel card which i must use for all fuel and must not put my own fuel in. I submit a monthly milage claim broken down into business and private miles. The company deducts 12p a mile from my salary for any private miles

As i understand it this creates no tax liabilty or allowance for fuel used

However having read the comments on here i am wondering wether i am able to claim back the 40p/25p from the HMRC for business miles even though i have not incurred any expenditure ( apart from wear and tear on my car )

is anyone else in this position?

Kevin VRs

11,640 posts

280 months

Friday 29th April 2011
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swerni said:
We were told that HMRC rules were changed and if you take the allowance you can't have a fuel card.
In my case it is absolute a benefit in kind, so the business are going to pay me £x per month so I'm not out of pocket.
A lot depends on the wording of the allowance. Is it is worded as a payment towards running your car then that has to be included in the calculation based on the 40/25p per mile (now 45/25p) and is also taxed at source (no NIC I believe). If it is simply an allowance then it is added to salary and taxed/NICed accordingly, no involvement in car running costs are taken.

My employer pays me a straightforward allowance and also reimburses all my fuel (inc private miles). My business miles are recorded and the total fuel bill split between private and business miles, the private miles (declared by me) portion is effectively added to salary and taxed. I then do the reclaim for the use of private car based on the 40/45/25p against tax so get refunded the tax bit.

Deva Link

26,934 posts

245 months

Friday 29th April 2011
quotequote all
fencer50 said:
However having read the comments on here i am wondering wether i am able to claim back the 40p/25p from the HMRC for business miles even though i have not incurred any expenditure ( apart from wear and tear on my car )
Wear and tear, and extra depreciation, are significant extra costs, so don't just dismiss them.

Yes, you should be claiming a tax rebate on your business miles. As your employer is paying for fuel, you need to deduct that from the claim. There are official rates fuel reimbursement rates - hopefully they match the 12p that your employer is deducting.