Car allowance/Fuel card - Best way to benefit?

Malt_Vinegar · 20 Oct 2015 at 08:55

Hi guys,
Moving jobs and will have the following
Car allowance of £4800 (£400) a month. I pay tax at 40%.
Milage claimed at 35ppm (company rate)
I am told I pay for personal miles (based on what I do not allocate as business usage)

So, I can claim back difference between Inland Revenue and company rates each year, is there anything else I should be considering/aware of to ensure I get the best deal?

I am not currently paying anything for the car I am running, but running it is not a long term option (too old and high milage), its a car I bought cheap whilst I moved house/jobs and handed back my last car. Just going to run it till it pops then get back into something much nicer

rodenal · 20 Oct 2015 at 09:20

Slightly confused, maybe it's because i've not had a co car in a number of years now - but you mention fuel card, then talk about mileage reclaim?

Malt_Vinegar · 20 Oct 2015 at 09:24

I might have got that wrong then!
Never had fuel cards before, was just on a straight car allowance. Let me correct that. No mention on card on my contracts! I could have sworn it was mentioned in interview?!

Will Gill · 20 Oct 2015 at 09:28

Easier to stay on ppm if you ask me, my old fuel card ended up costing me countless thousands of pounds in tax at (was PAYE) which I had to retrospectively claim back, in the long run I think I would have be a couple of hundred quid better off with a fuel card but the rigmarole of dealing with tax returns and what not was just a pain in the bum.

Phemo · 20 Oct 2015 at 09:41

I agree. I currently have a fuel card and at the moment I think I'd benefit more from just claiming back my mileage back. Much easier to keep track of. I'm now in the position where if I do ditch my fuel card in still going to be paying the tax for the fuel card from the previous year.

That said I haven't even done any mileage claims for the last 5 years so so when I do actually do it I'll get a nice chunk back, especially with an average of 4.5-5k spent on the card each year. On the other hand it is a plus not having to front any of the cash and my company are ok with me using it for personal miles too.

Havana_UK · 20 Oct 2015 at 10:01

Malt_Vinegar said:
Hi guys,
Moving jobs and will have the following
Car allowance of £4800 (£400) a month. I pay tax at 40%.
Milage claimed at 35ppm (company rate)
I am told I pay for personal miles (based on what I do not allocate as business usage)

So, I can claim back difference between Inland Revenue and company rates each year, is there anything else I should be considering/aware of to ensure I get the best deal?

I am not currently paying anything for the car I am running, but running it is not a long term option (too old and high milage), its a car I bought cheap whilst I moved house/jobs and handed back my last car. Just going to run it till it pops then get back into something much nicer

Fuel card confusion aside, your understanding is correct, however you can't claim the difference back between the company fuel rate and the HMRC fuel rate, you can claim the tax on the difference back (which is an important distinction).

Note also that your company's fuel rate is higher than that of HMRC once you exceed 10,000 business miles, so be aware that this will actually be considered a taxable benefit that will offset any claim against the <10,000 miles rate.

The way you calculate it is that you total up all of your business miles for the tax year, then total up how much you've claimed for the same period. You then work out what the HMRC approved rate would have been for the same miles, and claim/pay tax on the difference between the two. This is all done via your tax return.

Catanonia · 20 Oct 2015 at 10:22

1. You do not have a company car, just an allowance added to your pay rate so do not fall under company car rules.

2. Count your business mileage for the year as you use a fuel card (The card is a benefit and will be on your P11D at the end of the year see point 4)

3. End of the year count your miles and calculate 10k miles at 40p and rest at 25p (check, I think this is right)

4. Fill in your self assessment form with that the mileage cost as expense. Remember to put the P11D number as benefits as it will include pensions and the fuel card costs. The difference is your tax back.

5. DO NOT rely on the company to do this for you, Self Assess as it is your responsibility to do so and the company will wash their hands of it.

6. Get in your self assessment as soon as you can after company issues P11D and do it before end of July when the new tax codes come out. If you don't your tax code will be hit with a M Code emergency as you have had a lot of fuel as benefit and it has not been accounted for hence the M code,.

Simples and not difficult.

So many people shy aware from the simplified self assessment and the government knows it and they gain massive amounts of money per PAYE because of it. If you have any benefits from work or pay into a pension, you SHOULD BE self assessed as I bet the average person would get at least £100 rebate per year.

The Simple Self Assessment is very easy to do and only take 15 minutes as all the information is there for you on your P11D and end of year statement and in most cases is filling in 5 or 6 numbers (supplied) and signing the form.

If you do more than 15k miles a year, you should be benefiting from a fuel card. Fuel cards are nice to have and easy money if you have an efficient car.