Private mileage on company vehicles

[Mounty]

Just wondering whether others think this takes the pi$$ ?

Got an employee who does quite a few work miles with his company 4x4. All our vehicles are tracked. Regularly 200 miles during a weekend but this weekend snapping at the heals of 400 miles. Costing me a fortune in weekend diesel so he's gonna have to start paying.

What would you do?

[Scrump]

Not only is he costing you money, but he is making himself liable for BIK on the vehicle (is my understanding)

Or, is it his company vehicle on which he already pays BIK?

[PSRG]

My first thought would be, what does his employment contract say? Can he use it for private use, does he have fuel for private use paid for, and is he paying the appropriate BIK tax on it...?

[shake n bake]

What’s in the contract?
If non business mileage is covered then you’re on a hiding to nothing.
Interesting if it is as that’s a significant perk, non business mileage needs to be declared and taxed accordingly I believe.

[Glade]

What are the terms of the provision of the vehicle... only for work? Or for work and personal. Fully funded with fuel or not? Does the insurance you provide cover them? Do they pay tax on the benefit in kind for the vehicle?

400 miles a weekend isn't that much. E.g. visiting family /friends in Swindon from Leeds is 420 miles, plus a day trip while you are there quickly adds up.

A few years ago I had a fully maintained company car, with a fuel card and I could use it as much as I liked. I saw it as part of my salary.

Currently I have a car allowance to fund a suitable vehicle, and claim back fuel for business milage at 12p per mile.

So really depends on your own rules.

[Mounty]

Contract is business use only but we've let it slip on the basis that over and above a bit of running about they put there own fuel in for private mileage. Fuel cards linked to tracker show no private fuel is being put in. I find 10-12k miles a year just at weekends far too much and reflects in the residual after 3 years as it has another 30k miles on at changeover time.
I can't remember the ins and outs on BIK but if had use of it privately could we make him pay for fuel used?

[Scrump]

I think that if he has permission to use it privately then he is liable for BIK.

[Matt_E_Mulsion]

Well if the contract is business use only and up to this point you've let it slide on the basis that they can just pop around local as long as they put the fuel in, this guy is clearly taking the pee so I'd put a stop to all private mileage across the board. When it gets queried I'd be honest and say exactly why you've stopped the perk.

[Mounty]

Totally agree with that Matt.

Because he takes the vehicle home its difficult to monitor. Its his only vehicle so I accept he has to go to Tescos or garden centre whatever but how do you police it.
Make them photograph the tacho on Fri evening and Mon morning and then charge them by the mile for private use?

[Muzzer79]

If it’s only supposed to be used for business miles, is he insured for private use?

It’s not ‘his’ only car. It’s the company’s.

We had a chap at our place with a van he treated as if it was his own. To the point where he refused to give the keys up if it needed to be used during the day as he wouldn’t be able to get home.
Ridiculous.

[Muzzer79]

Mounty said:

Totally agree with that Matt.

Because he takes the vehicle home its difficult to monitor. Its his only vehicle so I accept he has to go to Tescos or garden centre whatever but how do you police it.
Make them photograph the tacho on Fri evening and Mon morning and then charge them by the mile for private use?

He should log the miles for each trip and account for every mile it does.

[Sheepshanks]

Mounty said:

Contract is business use only but we've let it slip on the basis that over and above a bit of running about they put there own fuel in for private mileage. Fuel cards linked to tracker show no private fuel is being put in. I find 10-12k miles a year just at weekends far too much and reflects in the residual after 3 years as it has another 30k miles on at changeover time.
I can't remember the ins and outs on BIK but if had use of it privately could we make him pay for fuel used?

You mentioned 4x4 and tacho - what sort of vehicle is it?

On a normal car, you (the company) would be in trouble big time with HMRC if you allow private use and he's not paying tax on it (and you're not paying employers NI). It's pretty unusual to supply fuel for private use these days as the tax burden on the employee is so high it's generally not worth it.

[Fugawi]

It’s a double cab pick up. When I said tacho I just meant the mileage reading. Not a tachometer like an hgv

[Matt_E_Mulsion]

Mounty said:

Because he takes the vehicle home its difficult to monitor. Its his only vehicle so I accept he has to go to Tescos or garden centre whatever but how do you police it.

At the end of the day it's not your problem that he doesn't have a vehicle of his own. He's abused the privilege that he has had, hence why you posted about how to address the problem.

It's easy for you to police, if the vehicle has a tracker just check that once he is home it doesn't move again until he resumes work. I also echo the point about whether your insurance covers the vehicles for social use by employees. Plus if there is no Benefit In Kind being paid for the use of the company vehicle don't let HMRC catch you!!!

[bristolbaron]

I worked for a main dealer some years back, the deal with them was fuel card is for station opposite the garage only. Fill up on a Friday/Sat eve, anything else needed I had to cover.

[Trophy Husband]

We use satrak for our 6 vehicles. Lads get a report every month. Records fuel use, economy, aggressive driving/braking and location. We have a scoring system linked to their driving. We reward the most sympathetic/sensible/economical driver each month. Plus I have an app on my phone that once they are at home I can disable the start until a prescribed time. They all know this and if they ever ask me for weekend use I never say no as long as they fuel the vehicle. Works well for me.

[Eric Mc]

If you are "allowing" him to have private use of a vehicle which is supposed to be 100% for business use only, you are putting yourselves in a very dangerous situation regarding exposure to a taxable Benefit in Kind assessment on the company which could result in a backlog of PAYE and NI plus penalties and interest.

On the assumption that this vehicle was never intended to have any private usage, I have to assume that you have not been submitting the relevant P11D form for this individual. That is a penalty offence in itself even before you get to calculating underpaid PAYE and NI.

What type of Capital Allowances were claimed on this vehicle?

How was/is Input VAT being claimed?

Allowing a "business only" vehicle to be used for "non-business" journeys is asking for all sorts of trouble.

[Drumroll]

unfortunately you rely do have a can of worms on your hand. The vehicle is tracked, so you can't claim you didn't know this was happening, in the event of the the police or HMCR coming round.

You are not managing your staff and may well miff the rest off, if you now do what you should have done and either stop any private mileage or allow it and get the drivers taxed accordingly. Don't forget travel between home and place of work is private mileage.

I certainly wouldn't allow this to continue.

Sorry to be blunt, but as somebody who almost got dismissed for not managing staff with tracked vans, I would hate for anybody else to go through it.

Edited by Drumroll on Monday 2nd September 16:48

[crofty1984]

I pay private fuel on my company car. If I didn't, HMRC would charge me something like £4k bik for the 300 miles of private mileage a month I do.
Plus, as people say, if it's a commercial vehicle and you're letting him do private miles, you're helping him evade (not avoid) tax.

[IJWS15]

As above. You, and he, are effectively stealing from the rest of us.

Add up everyone who is doing this and there is a hole in tax revenue which the chancellor fills by raising those taxes we can't avoid (income tax, NI, Stamp duty, corporation tax) which the rest of us pay.