Benefits in kind on P11Ds

by **GBfromDevizes** on Wed Oct 21, 2009 3:46 pm

Hi there

I own my car but my employers pay for all fuel used for business purposes. Recently, they sent me a P11D for the 08/09 tax year on which was entered £2,697 worth of fuel which was used for business purposes (I also have full mileage records to account for this amount of fuel). I rang my employers as I thought that a P11D was solely for showing "benefits-in-kind" which surely business fuel is not? They refused to budge so I rang my tax office who said they couldn't remove this figure on the P11D without an amended P11D from my employers. So stalemate....

The Inland Revenue surely will view the P11D and regard this £2,697 worth of fuel as being for my personal use rather than solely for business use and will seek to tax me on it as a benefit-in-kind. Can anyone advise me what I should do and whether indeed this fuel cost should even have been entered on the P11D in the first place?

Many thanks to anyone who may be able to assist.

by **RAL** on Wed Oct 21, 2009 3:56 pm

How did you claim or paid fuel to you? Was it paid based on mileage you did? Or Lump sum?

by **GBfromDevizes** on Wed Oct 21, 2009 5:55 pm

Hi there

The fuel is purchased on an " as I need it basis" via a fuel card, the receipts go back to the company who pay the bill on a monthly basis to the card issuer. I keep mileage records to justify the amount of fuel purchased. The amount used for private mileage is miniscule, less than 200 miles per year and this has always been declared to the taxman who has taxed it accordingly.

by **RAL** on Wed Oct 21, 2009 10:50 pm

Did you receive mileage payment? Or Just the fuel?

by **GBfromDevizes** on Thu Oct 22, 2009 7:43 am

Hi again

The company just pay for the fuel. I then claim from the Inland Revenue for business mileage as per their direction at 40p per mile for the first 10,000 miles, then at 25p per mile for the remainder. The company also pay me £350 per month by cheque to cover the other expenses associated with running the car, e.g. loan payments on the car, road fund tax, insurance, repairs, servicing, tyres and so on although this amount does not reflect the true or full cost to me of running the car.

by **MrPAYE** on Thu Oct 22, 2009 8:20 am

A couple of observations on this:

1) Your employer is correct in declaring fuel paid by them on your P11D. The tax charge on this is then negated when you lodge your claim for business miles at x miles at 40p/10p, which you state you already do.

2) The £350 per month paid to you by cheque should be subject to tax and NI through payroll as extra wages. If this is not happening just now then I seriously suggest you talk to your employer about this ASAP.

3) Very few HMRC inspectors would accept private mileage as low as 200 miles a year. Even the most reluctant of drivers would easily amass more than this over the course of a year. Of course, your situation may be that you have another vehicle which is used for private purposes but if not then you should ensure that your mileage records can absolutely back up that all but 200 or so miles was genuine business travel (not including home to work) and can stand up to HMRC scrutiny as the likelihood is that they will ask to see your records.

by **GBfromDevizes** on Thu Oct 22, 2009 10:43 am

Hi and thank you for your reply

Firstly, if what I claim back by way of the 40p/25p mileage allowances just goes to negate the tax burden of the business fuel shown on the P11D, then that means to all intents and purposes that I receive no benefit at all for using my car for business. Is that correct? My employers have only put the total fuel amount on the P11D for 08-09 and have not entered it on there for previous tax years.

Secondly, the £350 per month is entered onto my annual self assessment form and is therefore known to, and taxed by the IR

Finally, we do have another vehicle which is used at weekends. Once my car is home, it stay on the drive other than the very occasional times when both vehicles are needed. The IR have not remarked upon the low level of private mileage accrued in the 4 years at the company

by **robbob** on Thu Oct 22, 2009 10:57 am

Hello GB

Secondly, the £350 per month is entered onto my annual self assessment form and is therefore known to, and taxed by the IR

How do you include this amount on your sa return?
Is this amount taxed by your employer when paid?
Is thsi amount shown on your P11D

by **GBfromDevizes** on Thu Oct 22, 2009 12:07 pm

Hi robbob and thank you for replying

On my 08/09 P11D, the company have, in section M, included the £2,697 for business fuel used and £3600 for the monthly cheque they send me towards the upkeep and purchase of the car. Although they now pay us £350 a month for the car, it was only £300 per month in 08/09 hence the figure of £3,600. The £350 is paid by BACS into my bank account on or around the 21st of every month. The £350 is a "gross" figure and has not been taxed by my employer.

The IR have not asked me to complete a SA for the past three years. I completed one for the first full tax year that I worked for these employers and the IR asked for mileage records to substantiate my 40p/25p mileage claim which I sent them and which were accepted. They wrote back to say that they would no longer need to SA me, but that I should contact them "if my situation changed significantly" (which it hasn't) and that I should complete a P87 each year regardless to show business mileage, which I have complied with.

It's only been since my employers sent the P11D off to them recently to show the £2,697 business fuel as a "benefit-in-kind", that they now require me to SA after three years of not having to do so. This is the first time that my employers have included the business fuel on the P11D.

I have just received a notice of 09/10 PAYE coding in the post. It states my PAYE code as being 899L. To arrive at this, they have my personal allowance of £6475, my job expenses of £6115 totalling £12590 from which they have deducted £3600 ( this being what the company pay me per annum towards the cost of the car) leaving £8990.

Hope that helps as I am baffled by this!

by **robbob** on Thu Oct 22, 2009 2:59 pm

As you have been charged a benefit charge on the fuel and the £350 a month you have not really been paid anything on account for authorised mileage so i would claim the full amount claimable - which is what you seem to be doing at present.
Eg 11000 miles = 10,000*.4 + 1000*.25 = £4250 claim to enter in box 17 of the employemnt page.

You will end up with either a refund or payment due depending upon which is larger (The benefits or the mileage claim)

Note i am pretty much in agreement with Mr PAYE that the taxman may be missing out on EES NI on these monthly £350 payments - however this is probably more your employers problem than yours.
http://www.hmrc.gov.uk/paye/exb/a-z/m/mileage-expenses.htm
See the bit about the rules for NI - it may be they are happy the business mileage done is greater the amount paid - but i cannot see how the employer would know this for sure.

In summary employers like this are really numpties - it would be much easier if they just paid you the 40p/25p a mile tax free per your claims then there could very well be nothing to declare and no Cass 1A for them to pay.