Car Allowance + Fuel Card, tax question
Discussion
I've recently switched from company car + fuel card, where the company covered all fuel and I paid the BIK on both car and fuel, to a car allowance + fuel card, company still covering all fuel. I think I understand the tax situation, but seeking confirmation. Situation is thus;
40% tax bracket
Car allowance of £5900 pa
Expected fuel spending of £2400 pa
Obviously car allowance gets taxed under PAYE so no BIK implications there. I understand my P11D in April will show the total fuel spend, let's assume a full year and say £2400. My tax liability on this figure would amount to £960, though clearly this includes both private and business fuel spend. I believe I would then self assess for the business mileage and offset my tax liability on private fuel. My questions;
Lets assume I do 5k business miles per year, do I claim against the full 45ppm rate? This would mean an offset of 0.45*0.4*5000, or £900, leaving a liability for fuel of only £60 for the year. Upping the business mileage to 10k, the tax man would then owe me £840, despite the company covering the fuel outlay and paying me a car allowance, is this correct? As maintenance is my responsibility on my private car, this doesn't sound too absurd. Ultimately, I'm trying to forecast what I will owe the tax man, or be owed, in April for various foreseeable mileage amounts.
Additionally, would these amounts require a full self assessment, or simply a P87 or similar? Once I've submitted the required forms, would this typically be a lump sum payment for any outstanding liability, or a tax code adjustment?
40% tax bracket
Car allowance of £5900 pa
Expected fuel spending of £2400 pa
Obviously car allowance gets taxed under PAYE so no BIK implications there. I understand my P11D in April will show the total fuel spend, let's assume a full year and say £2400. My tax liability on this figure would amount to £960, though clearly this includes both private and business fuel spend. I believe I would then self assess for the business mileage and offset my tax liability on private fuel. My questions;
Lets assume I do 5k business miles per year, do I claim against the full 45ppm rate? This would mean an offset of 0.45*0.4*5000, or £900, leaving a liability for fuel of only £60 for the year. Upping the business mileage to 10k, the tax man would then owe me £840, despite the company covering the fuel outlay and paying me a car allowance, is this correct? As maintenance is my responsibility on my private car, this doesn't sound too absurd. Ultimately, I'm trying to forecast what I will owe the tax man, or be owed, in April for various foreseeable mileage amounts.
Additionally, would these amounts require a full self assessment, or simply a P87 or similar? Once I've submitted the required forms, would this typically be a lump sum payment for any outstanding liability, or a tax code adjustment?
Ive had this for 15 years now
Pretty much as described, either do self assessment or fill out a form, I find self assessment very easy, do it every year when I get my P11D and a few days later my tax refund is in the bank
Keep a record of business miles, total up 45ppm for 10K and 25ppm thereafter
In Self assessment you list the benefit value (fuel paid for) as per P11D
in other expenses I put my car reg, total bus miles and maths for my expense figures
You get tax relief on the difference ...which is essentially the private mile expense you have had paid
Be careful as HMRC will send you a revised tax code and build this in, then you have to do the same miles or you end up owing money next time. I prefer to know they owe me money and look forward to a refund versus a bill, it also prompts me to do my tax return ASAP each year. So when I get the new coding notice, I call them up and knock a bit off for next year, depending on my low estimate of future business mileage.
Pretty much as described, either do self assessment or fill out a form, I find self assessment very easy, do it every year when I get my P11D and a few days later my tax refund is in the bank
Keep a record of business miles, total up 45ppm for 10K and 25ppm thereafter
In Self assessment you list the benefit value (fuel paid for) as per P11D
in other expenses I put my car reg, total bus miles and maths for my expense figures
You get tax relief on the difference ...which is essentially the private mile expense you have had paid
Be careful as HMRC will send you a revised tax code and build this in, then you have to do the same miles or you end up owing money next time. I prefer to know they owe me money and look forward to a refund versus a bill, it also prompts me to do my tax return ASAP each year. So when I get the new coding notice, I call them up and knock a bit off for next year, depending on my low estimate of future business mileage.
You have it correct. Can work out very good value for private mileage!
This is assuming the company doesn't pay you any 'per mile' expenses. Which I guess they don't if they're giving you a fuel card and an allowance!
If they did, then you'd offset your 45p/25p mileage claim against what they'd already paid you.
This is assuming the company doesn't pay you any 'per mile' expenses. Which I guess they don't if they're giving you a fuel card and an allowance!
If they did, then you'd offset your 45p/25p mileage claim against what they'd already paid you.
When you think about it, how many people do 20K business miles then do another 10k (or more) private on top ?
So you do 5000 private miles in a car doing 35mpg, say £750 of fuel. You pay £300 tax for this fuel, it costs your company £450 for the benefit of you having a fuel card
The perceived benefit of a fuel card is huge, the true benefit may be a few hundred quid of fuel per year for your private use. The saving to the company by not having to employ extra payroll staff to do admin on mileage claims is not insignificant, particularly if you have quite a few sales staff on the road each day
Fuel cards are a win/win for both employer and employee
So you do 5000 private miles in a car doing 35mpg, say £750 of fuel. You pay £300 tax for this fuel, it costs your company £450 for the benefit of you having a fuel card
The perceived benefit of a fuel card is huge, the true benefit may be a few hundred quid of fuel per year for your private use. The saving to the company by not having to employ extra payroll staff to do admin on mileage claims is not insignificant, particularly if you have quite a few sales staff on the road each day
Fuel cards are a win/win for both employer and employee
My current situation sees me doing ~20k a year, business miles will probably be around 3k this year (commute is ~60 miles per day). My fuel card means I'll end up paying around £300 for a years worth of fuel, and cost my employer around £800 (once 3k mile @ £0.45 have been deducted from the total spend). Certainly a win for me, and as a perk it's not a massive amount for my employer to keep me happy. Certainly pales into insignificance against recruitment agency fees of ~£10k to replace me!
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