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Company Car Fuel Tax
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Thanks to anyone who answered my previous question on this subject. Been to tax office and they were absolutely useless.
Anyway, company I work for have said that following visit from taxman the private fuel I use on my company car which for the previous 15 years I had paid to the company is now to be taxed on instead which is going to cost me a rediculous amount (about �27 week). Only use about �5 week plus travel to work. Someone at work has told me that the company decided this and not the tax man. My question is what would the company gain by me paying tax instead of making a contribution back to the company?
Thanks to anyone who replies.
Anyway, company I work for have said that following visit from taxman the private fuel I use on my company car which for the previous 15 years I had paid to the company is now to be taxed on instead which is going to cost me a rediculous amount (about �27 week). Only use about �5 week plus travel to work. Someone at work has told me that the company decided this and not the tax man. My question is what would the company gain by me paying tax instead of making a contribution back to the company?
Thanks to anyone who replies.
Answers
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Fuel benefit is an all or nothing charge. In other words you either have all you fuel paid for or not, You can't make a contribution towards fuel but you can towards the use of the car.
Fuel benefit is calculated at �14,400 mutiplied by the percentage used to calculate the car benefit which depends on the CO2 emissions and fuel type of the car. The benefit is then charged at your highest rate of tax either 22 or 40%.
You could tell your employer that you don't want fuel benefit any more. You would then claim business mileage (not travel to and from work) back at the advisory fuel rates which depends on the engine size of your car (see http://www.hmrc.gov.uk/cars/advisory_fuel_curr ent.htm) or you could have or you could have all mileage paid by the company and reimburse them for all your private mileage which includes travel to and from work at the same advisory fuel rates. In either case you should keep good mileage records to prove to the Inland Revenue what your business and private mileage is for the year as well as records of fuel claimed or reimbursed in case it is ever challenged.
If you gave up your company car altogether and bought your own car you could then claim 40p a mile for the first 10,000 miles and 25p a mile thereafter.
If your company gave you a car allowance paid in your salary instead of a car, tax & nic would be paid through your wages and the 40p/25p a mile still claimed and that should then be the end of the matter.
I can't see that the company is gaining anything but they may have been dealing with it incorrectly in the past which has come to light from a visit by the Revenue and have been told how to do it correctly.
Fuel benefit is calculated at �14,400 mutiplied by the percentage used to calculate the car benefit which depends on the CO2 emissions and fuel type of the car. The benefit is then charged at your highest rate of tax either 22 or 40%.
You could tell your employer that you don't want fuel benefit any more. You would then claim business mileage (not travel to and from work) back at the advisory fuel rates which depends on the engine size of your car (see http://www.hmrc.gov.uk/cars/advisory_fuel_curr ent.htm) or you could have or you could have all mileage paid by the company and reimburse them for all your private mileage which includes travel to and from work at the same advisory fuel rates. In either case you should keep good mileage records to prove to the Inland Revenue what your business and private mileage is for the year as well as records of fuel claimed or reimbursed in case it is ever challenged.
If you gave up your company car altogether and bought your own car you could then claim 40p a mile for the first 10,000 miles and 25p a mile thereafter.
If your company gave you a car allowance paid in your salary instead of a car, tax & nic would be paid through your wages and the 40p/25p a mile still claimed and that should then be the end of the matter.
I can't see that the company is gaining anything but they may have been dealing with it incorrectly in the past which has come to light from a visit by the Revenue and have been told how to do it correctly.
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