Fuel Card Help!
Discussion
Evening all,
I've recently shifted roles at my current employer and as part of the improved package, I get a fuel card.
I know that this is a taxable benefit, and a colleague has suggested I inform HMRC straight away (which I'm intending to do).
However our finance department is a bit clueless about the whole process, so I wondered if the PH massive might have some input.
Can anyone tell me:
What exactly I need to tell the tax man?
How much will the benefit cost me (or how can I calculate the cost as the HMRC site doesn't seem to let me do it alone)?
What do I need to do either now (or at year end) with regard to claiming back my business mileage?
Thanks in advance!
I've recently shifted roles at my current employer and as part of the improved package, I get a fuel card.
I know that this is a taxable benefit, and a colleague has suggested I inform HMRC straight away (which I'm intending to do).
However our finance department is a bit clueless about the whole process, so I wondered if the PH massive might have some input.
Can anyone tell me:
What exactly I need to tell the tax man?
How much will the benefit cost me (or how can I calculate the cost as the HMRC site doesn't seem to let me do it alone)?
What do I need to do either now (or at year end) with regard to claiming back my business mileage?
Thanks in advance!
Depends if it's a company car, or your own car.
If it's your own car, then at the end of the year you will get the total mileage spend on your P11D. You keep a record of your business miles.
Multiply no. business miles, by allowable rate (usually 40p), and subtract that from the total spend. You pay income tax rate on the remaining amount and you sort it out in your end of year tax return.
At least that's my understanding of it !
Last time I had a company car, it was a flat rate charge depending on the emissions of the vehicle, but that was about 6 years ago so things might have changed...
If it's your own car, then at the end of the year you will get the total mileage spend on your P11D. You keep a record of your business miles.
Multiply no. business miles, by allowable rate (usually 40p), and subtract that from the total spend. You pay income tax rate on the remaining amount and you sort it out in your end of year tax return.
At least that's my understanding of it !
Last time I had a company car, it was a flat rate charge depending on the emissions of the vehicle, but that was about 6 years ago so things might have changed...
swerni said:
From that they subtract the mileage allowance the company give you ( mines about 18p per business mile)
The company doesn't give him a mileage allowance, he's got a fuel card.OP: We need to know:
1) Is it a company car or your own?
2) Does the company pay for all your fuel, business and private?
Hi chaps - thanks for the input and sorry for missing out the pertinent details ...
It's my car, rather than a company car, and according to the Finance department I just use the card to fill up - but keep a record of my business mileage. They haven't mentioned filling in a monthly declaration of that mileage - but our expense forms do have a section which may relate to that.
What I'm most concerned about is getting clobbered for unpaid tax next year for this benefit - but I'd also like to understand what impact the benefit will have on my tax code (and by association my take home salary).
Any information gratefully received - although I suspect what will come out will be a list of questions which I need our Finance department to answer.
ETA - I've just looked at the com car website (don't know why I hadn't seen this before when searching).
Although I couldn't specify the correct year for my car - choosing the oldest available on the com car website shows the percentage charge as 30% (value of benefit = £6,060). However I do low personal mileage (~7,000) in that vehicle as we have 3 kids and so have to use our other car most of the time.
I was concerned when the fuel card was offered that it wasn't going to be worthwhile and having plugged in the details it looks like I'll be £~600 worse off (if I'm reading it right) as I'm about 3,000 miles short of the break-even point.
It's my car, rather than a company car, and according to the Finance department I just use the card to fill up - but keep a record of my business mileage. They haven't mentioned filling in a monthly declaration of that mileage - but our expense forms do have a section which may relate to that.
What I'm most concerned about is getting clobbered for unpaid tax next year for this benefit - but I'd also like to understand what impact the benefit will have on my tax code (and by association my take home salary).
Any information gratefully received - although I suspect what will come out will be a list of questions which I need our Finance department to answer.
ETA - I've just looked at the com car website (don't know why I hadn't seen this before when searching).
Although I couldn't specify the correct year for my car - choosing the oldest available on the com car website shows the percentage charge as 30% (value of benefit = £6,060). However I do low personal mileage (~7,000) in that vehicle as we have 3 kids and so have to use our other car most of the time.
I was concerned when the fuel card was offered that it wasn't going to be worthwhile and having plugged in the details it looks like I'll be £~600 worse off (if I'm reading it right) as I'm about 3,000 miles short of the break-even point.
Edited by Rinko on Thursday 7th June 10:12
Deva Link said:
1) How many business miles will you do?
2) How many private miles?
3) What MPG does your car do?
4) is it petrol or diesel?
You should keep a record of your business journeys for 6 years for tax purposes.
Sorry - updated my earlier post with some more details, 2) How many private miles?
3) What MPG does your car do?
4) is it petrol or diesel?
You should keep a record of your business journeys for 6 years for tax purposes.
1). Bit of an unknown really - it's a new role within the business, so there is no historic data for comparison.
2). Around 7,000 (and that's probably being generous)
3). 34.0mpg according to ComCar - but really nearer 30.
4). 1.8 Petrol (VVTLi - hence the poor economy)
Rinko said:
ETA - I've just looked at the com car website (don't know why I hadn't seen this before when searching).
Although I couldn't specify the correct year for my car - choosing the oldest available on the com car website shows the percentage charge as 30% (value of benefit = £6,060).
That's for company owned cars - none of that applies in your case as it's your own car.Although I couldn't specify the correct year for my car - choosing the oldest available on the com car website shows the percentage charge as 30% (value of benefit = £6,060).
Deva Link said:
That's for company owned cars - none of that applies in your case as it's your own car.
That's a relief! Thanks for the clarification.Is there still a break-even point in that case - or is it always beneficial to have a fuel card in my circumstance?
Edited by Rinko on Thursday 7th June 10:24
I've had afuel card on a private car (company pays all miles, business and private) for 6 years, and only this year have they implemented a monthly mileage tracking system.
For a privately owned car, as long as you keep a record of your business miles, you should be able to sort it out at the end of the year; I don't know the various rates as an accountant works out my tax return for me (I'm inept, not mega rich!), but I thought it was 40ppm for business miles, for most cars, up to a certain total mileage/annum.
e.g.
at year end your total fuel card spend is £1000 (easy numbers)
You did 500 business miles @ 40ppm = £200
Deduct £200 from £1000 = £800, which is effectively your spend on private mileage, which is your "benefit"
You then pay tax on this benefit at your rate of income tax e.g. 40% would be £800 * .4 = £320, which is your "bill"
ie. you're paying £320 for your private mileage for the year. I think this is then absorbed into your tax code (or presumably you can pay your tax bill) for the next year.
BUT I'm not a tax or finance person, just someone with a fuel card, so others with more experience may differ (not sure Swerni's experience but he may know more than me!)
For a privately owned car, as long as you keep a record of your business miles, you should be able to sort it out at the end of the year; I don't know the various rates as an accountant works out my tax return for me (I'm inept, not mega rich!), but I thought it was 40ppm for business miles, for most cars, up to a certain total mileage/annum.
e.g.
at year end your total fuel card spend is £1000 (easy numbers)
You did 500 business miles @ 40ppm = £200
Deduct £200 from £1000 = £800, which is effectively your spend on private mileage, which is your "benefit"
You then pay tax on this benefit at your rate of income tax e.g. 40% would be £800 * .4 = £320, which is your "bill"
ie. you're paying £320 for your private mileage for the year. I think this is then absorbed into your tax code (or presumably you can pay your tax bill) for the next year.
BUT I'm not a tax or finance person, just someone with a fuel card, so others with more experience may differ (not sure Swerni's experience but he may know more than me!)
OK, so in its simplest form –
Let’s say you do 7K private miles (that’s low, does that include commuting?) and 8K business miles.
Your car does 30MPG and petrol cost £6.13 a gallon.
Your total fuel cost is £3065 which give rise to a tax liability (at 40% as everyone on PH pays at 40%) of £1226. Your employer puts this (£3065) on your P11D
However you can also claim from HMRC your business mileage at 45p miles for the first 10K miles.
So 8K biz miles gets you gross £3600 on which you would get a tax rebate at 40% of £1440. You claim this back using form P87.
So HMRC owe you £1440 – £1226 = £214.
Do check with your employer how they work. Many schemes require employees to repay their private mileage at HMRC approved rates which for your car would be 18p mile. So then the calculation is different:
Your fuel spend is still £3065 but you have to repay 7000 x 18p = £1260 so the gross benefit is £1805 on which tax of £722 is payable.
You still claim the 45p for business miles so you get a rebate of £1440 minus the £722 = £718. This sounds more but don’t forget you’ve paid back £1260 for private fuel so overall this way costs you £542 per year.
It's also possible, as swerni points out, that your employer may have a set mileage allowance, so the calcs change again.
I don't think there's much you can do by way of telling HMRC in advance - you just have to let the tax year complete, your employer will send in the P11D and you send in the P87 (if you don't normally do a tax return). However the amounts involved aren't far out of balance anyway, although getting HMRC to sync them up may be easier said than done.
ETA: Sorry - I first did this at 7K miles each for private and business but then so many of the figures came out the same it seemed confusing so I changed the biz miles to 8K. I think the numbers are right now!
Let’s say you do 7K private miles (that’s low, does that include commuting?) and 8K business miles.
Your car does 30MPG and petrol cost £6.13 a gallon.
Your total fuel cost is £3065 which give rise to a tax liability (at 40% as everyone on PH pays at 40%) of £1226. Your employer puts this (£3065) on your P11D
However you can also claim from HMRC your business mileage at 45p miles for the first 10K miles.
So 8K biz miles gets you gross £3600 on which you would get a tax rebate at 40% of £1440. You claim this back using form P87.
So HMRC owe you £1440 – £1226 = £214.
Do check with your employer how they work. Many schemes require employees to repay their private mileage at HMRC approved rates which for your car would be 18p mile. So then the calculation is different:
Your fuel spend is still £3065 but you have to repay 7000 x 18p = £1260 so the gross benefit is £1805 on which tax of £722 is payable.
You still claim the 45p for business miles so you get a rebate of £1440 minus the £722 = £718. This sounds more but don’t forget you’ve paid back £1260 for private fuel so overall this way costs you £542 per year.
It's also possible, as swerni points out, that your employer may have a set mileage allowance, so the calcs change again.
I don't think there's much you can do by way of telling HMRC in advance - you just have to let the tax year complete, your employer will send in the P11D and you send in the P87 (if you don't normally do a tax return). However the amounts involved aren't far out of balance anyway, although getting HMRC to sync them up may be easier said than done.
ETA: Sorry - I first did this at 7K miles each for private and business but then so many of the figures came out the same it seemed confusing so I changed the biz miles to 8K. I think the numbers are right now!
Edited by Deva Link on Thursday 7th June 12:01
Thanks for that - it all seems to make sense, but I will have to check whether I repay personal mileage or not.
RE: 7k personal mileage - yep, that includes my 3 mile each way daily commute, as that's pretty much the only thing I use it for. Sadly the Galaxy gets used for the rest of the time as I can't get the kids' 3 car seats into mine.
RE: 7k personal mileage - yep, that includes my 3 mile each way daily commute, as that's pretty much the only thing I use it for. Sadly the Galaxy gets used for the rest of the time as I can't get the kids' 3 car seats into mine.
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