Fuelling private cars through my business.
Discussion
I have fuel cards for my taxis and was wondering what the implications of my business fuelling my two private vehicles (Cerbera and Range Rover). How do I declare this as a benefit in kind? Both the RR and Cerby are owned by me and my wife outright and were bought before we bought the business. The Rangey is a 1996 4.6HSE and the Cerby is a 1999 4.5 if that has any bearing.
To be clear, both the private vehicles would be fully expensed fuel wise both private and in connection with the business (running to the bank/accountant/solicitor,etc NOT carrying fare paying pasengers!!)
Up until now I have claimed the mileage back, but it's a pain in the arse trying to remember how many miles, when and how. It would be much simpler to take the fuel allowance as part of our salary and ge taxed accordingly I think???
To be clear, both the private vehicles would be fully expensed fuel wise both private and in connection with the business (running to the bank/accountant/solicitor,etc NOT carrying fare paying pasengers!!)
Up until now I have claimed the mileage back, but it's a pain in the arse trying to remember how many miles, when and how. It would be much simpler to take the fuel allowance as part of our salary and ge taxed accordingly I think???
Richard,
Are you Director/Employees or Self Employed?
I've been reading up on this, as it applies to me too ;-)
So far I think, and I'm sure someone will correct me if wrong, it's like this:
The answer is different for each scenario.
If you are Director/Employee then you can show the private fuel as a benefit in kind and be taxed upon it normally.
If you are self-employed (you are the proprietor), then the Private element is a disallowable expense and is shown as such on you tax return.
Also there is also a VAT implication, if you are claiming VAT back on the fuel then you either have to restrict the VAT claim to business miles only or use the VAT Fuel Scale Charge.
Simon
Are you Director/Employees or Self Employed?
I've been reading up on this, as it applies to me too ;-)
So far I think, and I'm sure someone will correct me if wrong, it's like this:
The answer is different for each scenario.
If you are Director/Employee then you can show the private fuel as a benefit in kind and be taxed upon it normally.
If you are self-employed (you are the proprietor), then the Private element is a disallowable expense and is shown as such on you tax return.
Also there is also a VAT implication, if you are claiming VAT back on the fuel then you either have to restrict the VAT claim to business miles only or use the VAT Fuel Scale Charge.
Simon
That makes life so much easier.
For a start, you do not have to worry about tax Benefits in Kind at all. BIKs only apply to employees and directors. As a partner, you are not either.
What you should do is place the vehicles in the business so that Capital Allowances can be claimed. Being part business/private vehicles, the Capital Allowances will be restricted by a "Private Useage" percentage. That is normally based on the ratio of private to business miles. If the cars cost over £12,000 each, there will also be an "Expensive Car" restriction on the Capital Allowance claim.
Once the cars are in the business, then the ENTIRE running costs of the vehicles can be charged to the business - and VAT claimed where appropriate. That include VAT on repairs and maintenance of the vehicles.
The actual vehicle running costs (including fuel costs) of these cars would also be restricted (for tax but not VAT) by the Private Useage percentage for tax claim purposes.
Regarding VAT on fuel, as was stated previously, the correct VAT method to use is that ALL the VAT on fuel is claimed (with no attempt to split between business and private miles). The "private" element of the VAT on the fuel is recovered by the VAT man by you applying the correct VAT Fuel Scale Charge rate for the particular vehicles you are using. The VAT website contains all the details on what these rates. Be warned that they are in the process of being radically changed (from a crude CC based scale to a CO2 based scale).
If it works out that the VAT paid back to the VAT man under the Fuel Scale Charge system is greater than the VAT that you will recover on the fuel, the best solution is to not bother claiming back the VAT on this car fuel in the first place.
As ever, I have to ask, have you spoken to your accountant on this yet?
For a start, you do not have to worry about tax Benefits in Kind at all. BIKs only apply to employees and directors. As a partner, you are not either.
What you should do is place the vehicles in the business so that Capital Allowances can be claimed. Being part business/private vehicles, the Capital Allowances will be restricted by a "Private Useage" percentage. That is normally based on the ratio of private to business miles. If the cars cost over £12,000 each, there will also be an "Expensive Car" restriction on the Capital Allowance claim.
Once the cars are in the business, then the ENTIRE running costs of the vehicles can be charged to the business - and VAT claimed where appropriate. That include VAT on repairs and maintenance of the vehicles.
The actual vehicle running costs (including fuel costs) of these cars would also be restricted (for tax but not VAT) by the Private Useage percentage for tax claim purposes.
Regarding VAT on fuel, as was stated previously, the correct VAT method to use is that ALL the VAT on fuel is claimed (with no attempt to split between business and private miles). The "private" element of the VAT on the fuel is recovered by the VAT man by you applying the correct VAT Fuel Scale Charge rate for the particular vehicles you are using. The VAT website contains all the details on what these rates. Be warned that they are in the process of being radically changed (from a crude CC based scale to a CO2 based scale).
If it works out that the VAT paid back to the VAT man under the Fuel Scale Charge system is greater than the VAT that you will recover on the fuel, the best solution is to not bother claiming back the VAT on this car fuel in the first place.
As ever, I have to ask, have you spoken to your accountant on this yet?
Eric Mc said:
Loads of useful stuff and.....
As ever, I have to ask, have you spoken to your accountant on this yet?
As ever, I have to ask, have you spoken to your accountant on this yet?
Of course not! I wanted you to put in plain and simple English without much sucking of teeth
So, in short:
a) speak to my accountant
b) depending on useage/vehicle cost/VAT reclaimable it might not be worth doing
c) on the other hand, the vehicles would be financed by the business and apart from the private fuel VAT there are no other tax implications?
Thanks as ever Eric.
O/T I'm reading Vulcan 607 at the moment - can't put it down.
You can also restrict your VAT claim on fuel purchases to "business fuel" only, this may be more benefical than claiming it all, then using the scale charge for private.
You do need to record business/private mileage, but you need to do that anyway to eliminate the private use of the vehicle for tax purposes.
Like I said, I just read this stuff this morning as it applies to me too.
Of course all this will be simplified when the new simple tax system comes into force next year. The new yax return has one box and one instruction:
How much did you earn £xxxxxxx. Send it.
Simon
You do need to record business/private mileage, but you need to do that anyway to eliminate the private use of the vehicle for tax purposes.
Like I said, I just read this stuff this morning as it applies to me too.
Of course all this will be simplified when the new simple tax system comes into force next year. The new yax return has one box and one instruction:
How much did you earn £xxxxxxx. Send it.
Simon
Tyresmoke - if the business is financing the cars, then the relevant borrowing/lease agreement and financial costs incurred in servicing the finance is a legitimate business cost too. The claim in the accounts or tax computation should also be restricted by the "private useage" percentage, however.
O/T - Not read "Vulcan 607" but am reading David Morgan's account of his Sea Harrier war at the moment.
O/T - Not read "Vulcan 607" but am reading David Morgan's account of his Sea Harrier war at the moment.
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