Car allowance and fuel card question

mjheathcote

Centenary Club
Messages
9,033
I'm in the process of changing jobs, and the way they work with company cars and fuel is quite different.

Presently, I get a paid for company car, pay tax on BIK, have a fuel card and pay back all personal mileage to avoid tax.
The new job would be a car allowance, and fuel card for all by business and personal mileage.

From what I understand, because I get a car allowance, the value of all the fuel that is paid on the fuel card, is put down on the P11d as a benefit in kind.
Then you claim back on your tax return for the business miles, 45p first 10,000 miles, 25p thereafter.

So some typical figures:

Total mileage 25,000 a year, in a typical car doing 40 mpg.
Total cost of fuel approximately £3,550
£3,500 goes on your P11d that you pay tax on, at 40%, this would cost me £1,420 a year.

You then claim back the business miles.
20,000 miles business a year
10,000 x 0.45 = £4,500
10,000 x 0.25 = £2,500
Total £7,000
40% tax claim on £7,000 is £2,800

Therefore £1,420 less £2,800 is minus £1,380
So....not only do I get my private fuel for free, but £1,380 less tax to pay?

Have I got this right???
I'm an Engineer not an accountant!
 

D Walker

Member
Messages
9,827
I am not sure you get taxed on your mileage claim as its an expense not earnings, you all ready paid tax on the money you use to buy the fuel.....

Like you, engineering, so I leave an accountant to do all that stuff, but I don't see tax on my mileage claims....
 

agooner

Junior Member
Messages
103
I had a similar set-up when I was working. All fuel costs will appear on the P11D. If I remember correctly you then have to complete a Self Assessment Tax form on the HMRC website for all the business mileage you completed (I didn't do much and kept a record of every trip) at year end. On the form multiply the actual business mileage by the business mileage rate (as per your example) gives the amount that is deducted from the total fuel charge. This is all done on the HMRC form. The amount left over is treated as BIK and will appear on your HMRC tax demand for the following year as part of the tax code.
 

Scaf

Member
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6,511
I don’t think you are right.

My understand on the 45p rate 25p once you reach 10,000 is the rate you are allowed to claim as an expense and claim relief on.

So if you didn’t have a fuel card and they paid an rate per mile they can pay you up to the above limits without it being a benefit in kind. If they pay less than the above rates you can claim the difference and set it against you tax.

I think if they are paying your private mileage there is a set sum you are taxed on declared on your P11d (but I am not sure on this point.
 

Scaf

Member
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6,511
That’s odd - it works for me.
It’s a company car tax calculator on the HMRC website, for private file it just gives a yes / no option
 

Scaf

Member
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6,511
Yes, but if you look to the bottom it's says,
“Fuel benefit can only apply to drivers of a vehicle supplied by their employer. Van drivers should look at the rules on vantax.co.uk. If a driver of their own vehicle gets fuel provided for private use (usually via a fully expensed fuelcard) the private element will be taxed as though it was net salary.â€

Which indicates to me you can't set the fuel allowance off in the way the OP suggests.
 

D Walker

Member
Messages
9,827
I think Scaf is correct, which is why mine isn’t taxed...no fuel card, out my own pocket, sorry mike, misread..
 

mjheathcote

Centenary Club
Messages
9,033
If a driver of their own vehicle gets fuel provided for private use (usually via a fully expensed fuelcard) the private element will be taxed as though it was net salary.â€

That is correct, then you claim the tax back on business miles at 45/25p.
I'm sure I'm correct...
 

Andyk

Member
Messages
61,038
I had a fuel card and company car....All my fuel went on the fuel card so I was taxed as a benefit. I couldn't claim business miles back though as All fuel went on the fuel card which the company paid for. I was taxed around £160 a month for the fuel car but put in around £220 of fuel a month so it was worth having. It is a fine line between making a fuel car a benefit though. If you do the miles it can work....I was doing around 34k a year.
 

agooner

Junior Member
Messages
103
From the HMRC website:
Using your own vehicle
If you use your own vehicle for business, you may be able to claim ‘Mileage Allowance Relief’. To work out how much tax relief you can claim, add up your business mileage for the tax year and multiply it by the approved mileage rates. If your employer doesn’t pay you a mileage allowance you can claim the full approved amount of Mileage Allowance Relief.

https://www.gov.uk/tax-relief-for-employees/business-mileage-fuel-costs

The total amount of fuel cost for the preceding tax year will appear on your P11D. Your annual self assessment return will include the amount of business fuel cost to be offset against your tax demand from HMRC.
 

safrane

Member
Messages
16,746
This is why I get a hire car... £22 per day and I fill it up and claim back the cost.

Of course I only use the hire car for work.
 
Messages
1,117
OP: The whole area of cars provided for work is getting more and more complex. I always advise anyone who wants qualified and accurate up-to-date advise to spend 30' or 60' with an accountant to explain it and advise on best options (especially if you are able to negotiate the car option with your employer). Each of us is unique with regards to tax status - investments, types of investments, personal allowances and thresholds, type of employment contract etc. Hence my advice to talk to an expert such as an accountant on such matter. It can be value-add and money well-spent. I'd say typical charge for an hour will be around £200 + VAT but shop around and go for a small independent firm rather than a large regional one that is brimming with accountants and offices scattered across a geographic region (high costs!).
 

Scaf

Member
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6,511
....which I believe is the case on my first post. I think!

Not really, - in your original post you refer to claiming tax back against the mileage rates when in fact your employer is paying in full for your business miles (therefore there is nothing for you to claim back) and then
as they are paying your private mileage as well, rather than claiming something back, there will be tax to pay on that benefit.
 
Messages
1,117
Not really, - in your original post you refer to claiming tax back against the mileage rates when in fact your employer is paying in full for your business miles (therefore there is nothing for you to claim back) and then
as they are paying your private mileage as well, rather than claiming something back, there will be tax to pay on that benefit.

Yup. Contradictory statements, hence my suggestion to go and talk to an accountant.