Fuel Card with car allowance

Vauxmad · 18 Feb 2019 at 16:42

Hi motors!

I currently have a company car with fuel card including personal mileage.

I have now got the option of opting out and receiving £450 a month allowance (pretty sure I will be doing this) and then can either take the fuel card again or opt out of that too.

I do around 20k a year with the majority of that personal so thinking keeping the fuel card is in my best interest but not sure how to work out the BIK value.

When its a company car the fuel BIK is based on the cars list price and CO2 - does this still apply to a privately owned car?

I tried the HMRC webchat and am still a little confused!

Code:

 Your employer informs us how much the fuel card costs we then put that in your tax code. You then get taxed on that at 40% or 20% dependent on your wage 3:21 PM

DANIEL YOUNG
My mileage varies each month so does that mean my tax code will be constantly changing? 3:22 PM   

JAKE

They use a set amount for the year I believe. This is something you would need to speak to your employers about because Jim unsure how there payroll works 3:25 PM

I've emailed my payroll department but im sure theres a few here with the same circumstances who might be able to help me get my head around it?

Phemo · 18 Feb 2019 at 17:22

What mileage rate does your company pay? I used to have a fuel card which work were happy for me to use for personal mileage too but that's now gone. I get a car allowance still and 35p a mile from my company for the first 10k miles (and can claim tax relief on the 10p difference from HMRC if I can ever be bothered) and I'm finding that even at 35p a mile I'm making a killing.

For example a 250 mile trip that I did the other day cost me about £25 in fuel and yet I've claimed £87.50 for it. Even at the lower rate of 25p a mile for over 10k it's £62.50. It covers all my personal mileage and then some. Point is, if you choose car wisely you may find you're better off opting for the mileage claims rather than fuel card. Especially if your car allowance is covering the cost of the car and going at least some way towards servicing/tyres/etc.

Joe T · 18 Feb 2019 at 17:41

If the company give you a fuel card for use on your own car then it is usually taxed as a cash benefit (mine is). In other words your own fuel cost becomes 20% or 40% of the actual fuel cost.

Phemo · 18 Feb 2019 at 17:45

Yep I had to fill in a tax return declaring what miles were business miles so I only ended up paying the tax on my personal miles. I got quite lazy and missed out on about 3 years worth of it, including one year when I did about 40k business miles because I'm an idiot. Got quite a lot of money back over the 3 years I did claim though so it's all good.

That's another reason I'm glad to be just doing bog standard mileage claims now - no more dealing with HMRC unless, in my case, I can be bothered to claim that tax relief on the 10p a mile which in all honesty, I probably can't

I still think I'm way up on the 'profit' from doing mileage claims vs only paying tax on personal mileage though.

As for the effect the fuel card has on tax, what happened with me is that HMRC would use the amount spent the previous year as a basis for the next year's tax code. For example if I ended up spending £4500 one year then my next year's tax code was changed to deduct something like £4700 over the course of the year - I forget what the codes were exactly though. I know I spent over £5k on fuel one year and it dropped to £3.3k the next year when I got a more economical car and eventually my tax code evened out.

If I'd actually bothered to do my tax returns to tell them that about £3800 of that was business mileage then my tax code would've been much more realistic, however., and I would've only had to pay the tax on the other £700 so make sure you keep on top of your tax returns if you do go that route as I lost a lot of money by being lazy.

Vauxmad · 18 Feb 2019 at 17:55

Mileage rate is only 10p a mile at my place

Also to add i work from home 2/3 days a week but my official place of work is sutton coldfield. I live in Stoke and have 3 depots i generally have to visit 53 miles away (sutton coldfield), 123 miles away (luton) and 160 miles away (london).

So for a luton trip could claim 10p x 140miles = £14 and London £21.40?

Joe T · 18 Feb 2019 at 17:56

If you have company paid fuel on your own car you can tax relief on business miles (45p for first 10k, then 25p), which adds up pretty quickly.

DarkHorizon472 · 18 Feb 2019 at 18:11

Joe T said:
If you have company paid fuel on your own car you can tax relief on business miles (45p for first 10k, then 25p), which adds up pretty quickly.

This is how it works. I have a car allowance which is paid as income and taxed as income through PAYE (income tax). This in my case pays for me to buy a low mileage three year old car with three year warranty to run for three years. Typical costs are loan, car tax, business use car insurance, servicing and tyres. After three years any value left in the car is mine as I own it.

Then I get a fuel card which is used for business and personal mileage. The total cost of the fuel I use is then taxed as a benefit through income tax. E.g £3000 fuel in a year x income tax rate is what I pay. I then fill in a tax return to claim back business mileage at 45p for first 10,000 and 25p per mile afterwards. This is not income but added to my tax free allowance which in my case completely offsets my fuel card and other benefit costs. Effectively I get free fuel and other benefits with sufficient business mileage depending on personal mileage.

Very simply assume fuel card plus benefits equals £4500, if I do 10,000 business miles that gives me £4,500 on my tax return to completely offset fuel card and other benefits.

Tinders · 18 Feb 2019 at 19:10

DarkHorizon472 said:
This is how it works. I have a car allowance which is paid as income and taxed as income through PAYE (income tax). This in my case pays for me to buy a low mileage three year old car with three year warranty to run for three years. Typical costs are loan, car tax, business use car insurance, servicing and tyres. After three years any value left in the car is mine as I own it.

Then I get a fuel card which is used for business and personal mileage. The total cost of the fuel I use is then taxed as a benefit through income tax. E.g £3000 fuel in a year x income tax rate is what I pay. I then fill in a tax return to claim back business mileage at 45p for first 10,000 and 25p per mile afterwards. This is not income but added to my tax free allowance which in my case completely offsets my fuel card and other benefit costs. Effectively I get free fuel and other benefits with sufficient business mileage depending on personal mileage.

Very simply assume fuel card plus benefits equals £4500, if I do 10,000 business miles that gives me £4,500 on my tax return to completely offset fuel card and other benefits.

Didnt think you could claim back tax relieve on business miles if you had a fuel card??

I gave my fuel card up last year, as having it put me into the higher rate tax bracket, which nadgered me on all my benefits, thankfully at the same time my private miles dropped to 8k pa. Comcar has got great info on all things company car related.

Terminal_Boy · 18 Feb 2019 at 19:21

Are you sure you can claim mileage if you get a fuel card for a company car? Unless you have to pay to park to attend meetings at customer/vendor premises, you are driving for free on both the company’s and your own time.

rodenal · 18 Feb 2019 at 19:35

It looks like you can now, though I never used to be able to (albeit it's been 10 years since I had a company car). I imagine it's on the business portion only

I suppose it makes sense in that you are otherwise being taxed for company fuel as a benefit whereas people without a fuel card can claim tax relief in their business mileage.

Edit - I never a car allowance plus fuel card, only car and card

Tinders · 18 Feb 2019 at 19:40

We certainly couldnt when i looked at opting out 2 years ago.. The company are covering the cost of business fuel with the card,and the cost of the car with the allowance.

Mercenary Keyboard Warrior · 18 Feb 2019 at 21:02

I have a car allowance and company fuel card, like others above, any spend is treated as personal and put through monthly as such. I pay tax and NI on it.
Also monthly I can claim back any mileage at 45p per mile for first 10k miles per annum.

DarkHorizon472 · 18 Feb 2019 at 22:15

Tinders said:
Didnt think you could claim back tax relieve on business miles if you had a fuel card??

I gave my fuel card up last year, as having it put me into the higher rate tax bracket, which nadgered me on all my benefits, thankfully at the same time my private miles dropped to 8k pa. Comcar has got great info on all things company car related.

It depends on how your employer / company runs it. If the Fuel Card is simply used to buy all fuel (business and personal), is on your P60 as a benefit and you get nothing else back from the company towards fuel you can claim all business mileage back on a tax return assuming you get a car allowance that is paid and taxed like income for you to provide your own car. Otherwise car and fuel tends to be treated as a benefit you simply pay tax on if you get to use it for personal use as well as business, some companies can reduce this by adjusting for business mileage but I don't know how it works in this way. Purely for business use means your tax is unaffected as it is a tool for work and not a personal benefit. If in any doubt get proper professional advice.

Terminal_Boy · 18 Feb 2019 at 22:28

Mercenary Keyboard Warrior said:
I have a car allowance and company fuel card, like others above, any spend is treated as personal and put through monthly as such. I pay tax and NI on it.
Also monthly I can claim back any mileage at 45p per mile for first 10k miles per annum.

You have a car allowance, not a company car.

Mercenary Keyboard Warrior · 18 Feb 2019 at 22:45

Terminal_Boy said:
You have a car allowance, not a company car.

Same as the OP asked about, and yes thats what I wrote

Your point?

IAmATeaf · 19 Feb 2019 at 09:52

I opted out of a fuel card years ago as unless I did sky high private mileage it just wasn't worth it, is this not the case anymore?

Also I don't understand how you can claim the tax difference on mileage if you have a fuel card? I thought it was always based upon the difference in the per miles that your employer gave you and what the tax mans per miles allowance is?

EDIT: Found this site and for me personally it still seems it's not worth it.
https://comcar.co.uk/fuel/benefit/

Mercenary Keyboard Warrior · 19 Feb 2019 at 10:29

IAmATeaf said:
I opted out of a fuel card years ago as unless I did sky high private mileage it just wasn't worth it, is this not the case anymore?

Also I don't understand how you can claim the tax difference on mileage if you have a fuel card? I thought it was always based upon the difference in the per miles that your employer gave you and what the tax mans per miles allowance is?

EDIT: Found this site and for me personally it still seems it's not worth it.
https://comcar.co.uk/fuel/benefit/

There are a couple of variables and hence a table of scenarios.
The main differentiator is company car vs car allowance. If you take a car allowance its treated as a perk for the tax system (its basically just extra salary as far as revenue are concerned), but it means a fuel card is also a perk and hence its taxed as such, so you pay tax the on the benefit actually received.
If you have a company car, and a fuel card that provides ANY personal benefit then you pay the fixed BIK rate, based on the car emissions. The card is a perk in effect but its overridden by a specific rule on how the benefit is taxed as opposed to the simple benefit gained value which most perks are taxed on.
The only way round the fuel card BIK issue with a company car is that you have to pay for private miles, at an agreed rate (typically card spend/miles over a period, again typically the billing cycle of the fuel card). If you have to pay for private miles you can avoid the fixed BIK rates as you have received no benefit.

The card itself isn't the issue, its the mechanism in regards the benefit gained, and that if you have a company car, and receive private mileage they have a fixed benefit attached.
You are technically still just as liable for the full BIK if the company reimburses you for any nonbusiness mileage and you have a company car. Less likely to be found unless the employer has a significant audit of reimbursed expenses.

Lots of companies don't want all the agro of the admin to minimise the employees tax position so tend to offer a take it or leave it approach.

This helps

http://www.emtax.co.uk/blog/how-to-avoid-the-car-benefit-charge