HMRC advisory fuel rates - car allowance
Discussion
Perhaps I was not clear enough. I receive a car allowance not a company car.
The first section of the document that you link to is helpful, especially the last line.
These rates only apply to employees using a company car.
Use the rates when you either:
reimburse employees for business travel in their company cars
need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
The first section of the document that you link to is helpful, especially the last line.
These rates only apply to employees using a company car.
Use the rates when you either:
reimburse employees for business travel in their company cars
need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
Edited by surveyor on Monday 4th April 13:39
Dan_M5 said:
its 45p per mile. Company can pay what ever they like under it you just claim the difference back
for the first 10k miles,then 25 p for the rest.
you need to be very clear when filling in your annual assessment as to how you have calculated the mileage. There is a comments box use it
eg - i did 10k miles at 17ppm, so I am claiming 10k x ( 45-17) and 2 k, at 17ppm,so also claim 2k x (25-17)as my relief.
surveyor said:
Perhaps I was not clear enough. I receive a car allowance not a company car.
The first section of the document that you link to is helpful, especially the last line.
These rates only apply to employees using a company car.
Use the rates when you either:
reimburse employees for business travel in their company cars
need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
I stand to be corrected but I think the AFA is the same whether you have a company car OR whether you get a car allowance.The first section of the document that you link to is helpful, especially the last line.
These rates only apply to employees using a company car.
Use the rates when you either:
reimburse employees for business travel in their company cars
need employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
Edited by surveyor on Monday 4th April 13:39
The 45ppm is supposed to cover depreciation, wear and tear, insurance, RFL, and fuel
The car allowance is supposed to cover all of the above apart from fuel.
Ergo you should only be getting the 15ppm.
https://www.gov.uk/expenses-and-benefits-business-...
That's the 45p/25p source which are the limits HMRC allow. A business could decide to pay more but then it becomes tax deductible. Likewise, they can also pay less and thus (as mentioned above), you can claim tax relief on the difference between the MAP rate and what you are paid.
That's the 45p/25p source which are the limits HMRC allow. A business could decide to pay more but then it becomes tax deductible. Likewise, they can also pay less and thus (as mentioned above), you can claim tax relief on the difference between the MAP rate and what you are paid.
Countdown said:
The car allowance is supposed to cover all of the above apart from fuel.
Ergo you should only be getting the 15ppm.
Nope. You can get both. Ergo you should only be getting the 15ppm.
We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
Sheepshanks said:
Nope. You can get both.
We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
You can get both but an Employer shouldn't need to pay both. Theoretically the 45ppm is supposed to cover the full costs of running a car so if you're getting an allowance to cover the costs of the car you shouldn't be getting the full ppm rate on top. However as has already been pointed out your employer can choose to pay whatever they like.We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
Countdown said:
Sheepshanks said:
Nope. You can get both.
We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
You can get both but an Employer shouldn't need to pay both. Theoretically the 45ppm is supposed to cover the full costs of running a car so if you're getting an allowance to cover the costs of the car you shouldn't be getting the full ppm rate on top. However as has already been pointed out your employer can choose to pay whatever they like.We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
Car Allowance is treated and taxed no differently to additional salary. As such any vehicle used by the employee, even if funded by the car allowance, is a private car and qualifies for the higher rates.
Company car fuel rates are applicable to company cars.
CheesecakeRunner said:
Abdul Abulbul Amir said:
Car Allowance is treated and taxed no differently to additional salary. As such any vehicle used by the employee, even if funded by the car allowance, is a private car and qualifies for the higher rates.
The company’s expense policy trumps whatever the Inland Revenue say. The company may pay more or less than the HMRC recommend, and the only impact HMRC’s recommendation has is how much or little tax the employee pays on it. My company has a similar policy to the OP’s…
If you get a car allowance, you can only claim from the company an amount in line with the Advisory Fuel Rate for the type of vehicle you are using. If that car happens to be a salary sacrifice car, we regard it as a company car, and you also pay BIK. If that car is a privately owned one, you can claim the tax back on the difference between the Advisory Fuel Rate and the Approved Mileage Rate of 45p/25p.
If you don’t get a car allowance, you can claim the Approved Mileage Rate.
This is all completely legal and above board (global organisation with 300k employees), and no employee is getting anything else no matter how much they moan about what HMRC says.
By the way these are official rates that are applicable for income tax calculations, these arent "recommendations" and arent trumped by a company's mileage policy even if their payout rate is different....causing a taxable benefit or relief.
Eta
Also, cars provided via salary sacrifice qualify as private cars for HMRC official rates.....actually scrap that...that depends on the structure of the agreement and most likely will be treated as company cars.
Edited by Abdul Abulbul Amir on Monday 4th April 17:40
Edited by Abdul Abulbul Amir on Monday 4th April 17:48
Abdul Abulbul Amir said:
Countdown said:
Sheepshanks said:
Nope. You can get both.
We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
You can get both but an Employer shouldn't need to pay both. Theoretically the 45ppm is supposed to cover the full costs of running a car so if you're getting an allowance to cover the costs of the car you shouldn't be getting the full ppm rate on top. However as has already been pointed out your employer can choose to pay whatever they like.We had the allowance rolled into our salary a few years ago and we now get the full 45p/25p. Of course this hasn't worked very well during lockdown and people have been asking for an allowance - conveniently forgetting that they already get one!
Car Allowance is treated and taxed no differently to additional salary. As such any vehicle used by the employee, even if funded by the car allowance, is a private car and qualifies for the higher rates.
Company car fuel rates are applicable to company cars.
If it was me then I've not actually disagreed with anything you said. The employer can pay any mileage rate they like from 1ppm to £100 per mile. 45ppm will be tax free, anything above this will get taxed via your P11d
My point was the justification for getting the full 45ppm. If your car allowance was meant to be part of your salary then it should be rolled up and paid as part of your salary. The reason it usually isnt is because your Employer expects you to have a car available for work purposes. And if they're paying for you to have a car available they don't need to pay the full ppm allowance. My current company pays a car allowance and a lower level of ppm. My previous company paid 25ppm for those people who were receiving a car allowance. it happens regularly as far as Im aware - why would Employers pay the full rate when they don't need to?
CheesecakeRunner said:
Abdul Abulbul Amir said:
By the way these are official rates that are applicable for income tax calculations, these arent "recommendations" and arent trumped by a company's mileage policy.
In terms of what a company actually pays its employees, the company’s expense policy is all that matters. They have no obligation to pay the amounts HMRC suggest. 
and if you're paying a car allowance and the FULL HMRC rate you're paying twice over.Countdown said:
Are you replying to me or Sheepshanks?
If it was me then I've not actually disagreed with anything you said. The employer can pay any mileage rate they like from 1ppm to £100 per mile. 45ppm will be tax free, anything above this will get taxed via your P11d
My point was the justification for getting the full 45ppm. If your car allowance was meant to be part of your salary then it should be rolled up and paid as part of your salary. The reason it usually isnt is because your Employer expects you to have a car available for work purposes. And if they're paying for you to have a car available they don't need to pay the full ppm allowance. My current company pays a car allowance and a lower level of ppm. My previous company paid 25ppm for those people who were receiving a car allowance. it happens regularly as far as Im aware - why would Employers pay the full rate when they don't need to?
I was replying to your good self.If it was me then I've not actually disagreed with anything you said. The employer can pay any mileage rate they like from 1ppm to £100 per mile. 45ppm will be tax free, anything above this will get taxed via your P11d
My point was the justification for getting the full 45ppm. If your car allowance was meant to be part of your salary then it should be rolled up and paid as part of your salary. The reason it usually isnt is because your Employer expects you to have a car available for work purposes. And if they're paying for you to have a car available they don't need to pay the full ppm allowance. My current company pays a car allowance and a lower level of ppm. My previous company paid 25ppm for those people who were receiving a car allowance. it happens regularly as far as Im aware - why would Employers pay the full rate when they don't need to?
You qualify for HMRC private car rates if you receive a car allowance for the reason I gave. As previously mentioned the company may pay a lower rate which means you can get a coding change for the difference.
Countdown said:
If your car allowance was meant to be part of your salary then it should be rolled up and paid as part of your salary.
Most companies don't do this. The reasons are many and varied but it means that they don't have to include it in any pension calcs, redundancy calcs or bonus calcs. Equally the process and payment is typically in line with 'policy', rather than a contractual obligation so they can vary the terms if needed.You also end up with people 'forgetting' they are already being paid as per Sheepshanks' point upthread
Countdown said:
The reason it usually isnt is because your Employer expects you to have a car available for work purposes. And if they're paying for you to have a car available they don't need to pay the full ppm allowance. My current company pays a car allowance and a lower level of ppm. My previous company paid 25ppm for those people who were receiving a car allowance. it happens regularly as far as Im aware - why would Employers pay the full rate when they don't need to?
Most employers look for it to be cost neutral vs a traditional company car for them, you can slice the cake which ever way to achieve thatsurveyor said:
Thanks all. This is all as I thought.
Not suggesting 45p by the way, just an increase from the current figure which has been fixed for ten years.
If they are stating that the rates they will pay for use of a private car are aligned to the rates paid for fuel to company car drivers, they went up last month. I think they are reviewed every three months and sometimes go down. 15p/m is the current rate for a 1400-2000cc petrol carNot suggesting 45p by the way, just an increase from the current figure which has been fixed for ten years.
Abdul Abulbul Amir said:
I was replying to your good self.
You qualify for HMRC private car rates if you receive a car allowance for the reason I gave. As previously mentioned the company may pay a lower rate which means you can get a coding change for the difference.
Which part of my post was incorrect?You qualify for HMRC private car rates if you receive a car allowance for the reason I gave. As previously mentioned the company may pay a lower rate which means you can get a coding change for the difference.
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