Fuel - Benefit in Kind
Discussion
Hopefully an accountant type can answer a query for me:
I used to work for a company that operated the following system -
You were expected to use your own car for business (car allowance paid).
You were given a fuel card which entitled you to 'free' fuel for the car, both personal and business (with a monthly limit on personal fuel - which was not enforced).
You were taked as a BIK for the value of fuel used, and then you claimed back the business miles in your own tax return.
Are you still able to do this?
I used to work for a company that operated the following system -
You were expected to use your own car for business (car allowance paid).
You were given a fuel card which entitled you to 'free' fuel for the car, both personal and business (with a monthly limit on personal fuel - which was not enforced).
You were taked as a BIK for the value of fuel used, and then you claimed back the business miles in your own tax return.
Are you still able to do this?
Skip to the next post - this is wrong !!
Fuel card means you get taxed on the BIK value of £14k, whether you use the fuel or not.
Without a fuel card, you claim your business mileage at whatever rate the company pays (say Xp). You then claim the difference between that and the IR guideline figures as an allowable cost.
ie.
(40p-Xp) * tax rate up to 10k business miles
(25p-Xp) * tax rate beyond 10k business miles
In your case your company has paid for the business mileage via the fuel card so you've nothing to claim there.
Hopefully someone more knowledgeable can confirm.
Fuel card means you get taxed on the BIK value of £14k, whether you use the fuel or not.
Without a fuel card, you claim your business mileage at whatever rate the company pays (say Xp). You then claim the difference between that and the IR guideline figures as an allowable cost.
ie.
(40p-Xp) * tax rate up to 10k business miles
(25p-Xp) * tax rate beyond 10k business miles
In your case your company has paid for the business mileage via the fuel card so you've nothing to claim there.
Hopefully someone more knowledgeable can confirm.
Edited by vee on Tuesday 20th March 15:48
The Fuel Scale Charge Benefit in Kind kicks in when the employer provides the employee with BOTH a Company Car AND Fuel.
The Charge is based on £14,400 multiplied by a perecentage which is arrived at by reference to the company car's official CO2 rating. This is notified to the Revenue by the Employer on a Form P46 (Car) and also on the annual Form P11d
In the example mentioned in the query, it seems that the employee is using his own car but the employer is paying for all his fuel - both business and private. I'm not exactly sure what happens in these circumtsnaces. There is no doubt that the empoloyee is receiving a benefit. But what mechanism is used to calculate the tax value of that benefit?
I would suggest it is on the asolute amount paid by the employer for the fuel. The employee would be charged to tax on this actual amount.
As he is using his own personal car, he can make the pence per mile business miles expense claim on a Self Assessment Tax Return which would mitigate the tax on the benefit of the fuel supplied by the employer.
The Charge is based on £14,400 multiplied by a perecentage which is arrived at by reference to the company car's official CO2 rating. This is notified to the Revenue by the Employer on a Form P46 (Car) and also on the annual Form P11d
In the example mentioned in the query, it seems that the employee is using his own car but the employer is paying for all his fuel - both business and private. I'm not exactly sure what happens in these circumtsnaces. There is no doubt that the empoloyee is receiving a benefit. But what mechanism is used to calculate the tax value of that benefit?
I would suggest it is on the asolute amount paid by the employer for the fuel. The employee would be charged to tax on this actual amount.
As he is using his own personal car, he can make the pence per mile business miles expense claim on a Self Assessment Tax Return which would mitigate the tax on the benefit of the fuel supplied by the employer.
I suspect its me thats thick.......
Currently, I drive my own car to work and pay my own fuel.
I spend about £5000 on fuel just to/from work. Obviously, this £5000 is coming out of my salary after deductions etc.
If I have my own car and a company fuel card, I could claim for all fuel, get taxed at source on the value used as a BIK. This £5000 of fuel would therefore only cost me £5000 x 40% (less any business miles), and would be pre-deductions. Obviously the company would be subsidising me, but thats the idea.
Is this right?
Currently, I drive my own car to work and pay my own fuel.
I spend about £5000 on fuel just to/from work. Obviously, this £5000 is coming out of my salary after deductions etc.
If I have my own car and a company fuel card, I could claim for all fuel, get taxed at source on the value used as a BIK. This £5000 of fuel would therefore only cost me £5000 x 40% (less any business miles), and would be pre-deductions. Obviously the company would be subsidising me, but thats the idea.
Is this right?
Eric, thanks for your patience!
Right, i'll try to make sense....
I used to work in a company who had the following system;
all staff (at a certain level) would recieve a lump sum car allowance in their salary, in lieu of a company car.
they would also get a fuel card, which entitled them to charge all fuel used (business and personal) to the company.
at the end of each year (on the P11D), each individual would pay tax on the total value of fuel used in the year, so in effect it is being deducted with your tax code each month.
everybody would then claim back the maximum IR allowance for business miles done in own car in their Self Assessment (40p upto 10000 miles / 25p after that).
-------------
It is my intention to have this system implemented at my new company, the only difference being there is no car allowance paid (all in salary), but i am not sure this is relevant.
-------------
I hope this makes more sense!
Right, i'll try to make sense....
I used to work in a company who had the following system;
all staff (at a certain level) would recieve a lump sum car allowance in their salary, in lieu of a company car.
they would also get a fuel card, which entitled them to charge all fuel used (business and personal) to the company.
at the end of each year (on the P11D), each individual would pay tax on the total value of fuel used in the year, so in effect it is being deducted with your tax code each month.
everybody would then claim back the maximum IR allowance for business miles done in own car in their Self Assessment (40p upto 10000 miles / 25p after that).
-------------
It is my intention to have this system implemented at my new company, the only difference being there is no car allowance paid (all in salary), but i am not sure this is relevant.
-------------
I hope this makes more sense!
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