Where Taxpayers and Advisers Meet

Car allowance + expensed fuel card

Posts: 2
Joined: Wed Jan 21, 2009 5:58 pm

Car allowance + expensed fuel card

Postby fyrestar » Wed Jan 21, 2009 6:03 pm

Hi all,

Im a total noob to taxation and Im sure this question has been asked on here before but my computing skills are right up there with my Taxation skills - rubbish !

So, my situation is this:

I receive a car allowance from my company to the tune of 10% of my salary which I pay 40% tax on.
I also have a company fuel card which pays for both my private and business miles.
I figured I did around 22k business and 8k private miles.

I keep getting different answers from the inland revenue when I phone them as to whether I am supposed to claim anything back, can you guys help?

Posts: 1
Joined: Fri Jan 23, 2009 11:29 am

Re: Car allowance + expensed fuel card

Postby Doctorrog » Fri Jan 23, 2009 11:40 am

This area is poorly documented and there is no direct refernece to this situation on the HMRC site.

My understanding is as follows:

If you have a private vehicle used for business mileage AND you have all personal and business fuel paid for by your employer, the following points apply (If I am definintely wrong, please someone tell me).

- You can forget the 14800? valuation for a fuel card with a company car - this does not apply to the use of a private vehicle - so you can forget all that emissions stuff etc.

- You can get relieve on the Mileage Allowance Rate - thie is 40p a mile up to 10,000 p.a. and 25p a mile above 10,000 miles p.a. I understand you needto keep a record of your biz trips and submit them to the IR. You can then claim this back - it can therefore be significant.

However, if your employer is paying you in some manner, fuel card or expensed, then you have to subtract the employers contribution from the MAR rate - i.e. if you get 10p of fuel for each business mile you do from your employer, you can only claim back from the IR 40p - 10p = 30p for each mile you do. This is for less than 10,000 miles. If you do more than that the marginal rate drops so you are only getting 25p-10p = 15p per mile that you can claim back.

The private mileage can only be logically taxed as a benefit in kind - i.e. at whatever your marginal rate of tax is 20% or 40%. I would expect your employer would declare this annually to the IR - or indeed you complete it on your tax return.

All seems quite simple ( if it is correct - which I think this mostly is). Strange that nobody in the government can explain it on a web page anywhere and they are all so confused in the IR...! :o))


P.S. If this is wrong, please someone tell me!

Posts: 2
Joined: Wed Jan 21, 2009 5:58 pm

Re: Car allowance + expensed fuel card

Postby fyrestar » Fri Jan 23, 2009 1:29 pm

thanks for that, your answer makes sense but its difficult to get a straight answer out of the HMRC, I have spoken to their 'advisors' numerous times and never get the same answer twice.
First its, "fill out a self assessment" then its "fill out a P87", just lately its been "you cant claim anything back sir"

Apparently, the fully expensed fuel card is regarded as a benefit in kind because they pay for my private mileage and business mileage and so was told I cant claim anything back.
However my tax will change depending on how much fuel I have used (private and business combined) for the previous year which means I am paying more, the more miles Im doing regardless of whether its work or private mileage.

The Car allowance is also regarded as a BIK and taxed at 40% as if it were part of my normal wage, and so would not be able to claim anything back here either. I argued that if the company gave me £10 a year as a car allowance then in their eyes I wouldnt be able to claim anything back here either but would obviously be well out of pocket, I was then told "thats between you and your company sir".

Im not sure what to make of it as Im told a different story by them everytime, the whole "Tax made simple" is a joke when they cant get a straight answer.

Return to “Company Taxation”