[ShereKhan]

Originally Posted by NFS

Even though your business fuel is paid for directly, you can still claim a mileage rebate from HMRC. Unfortunately, you only get back the tax you paid on the difference, not the difference itself, but if you do 20,000 miles a year it could still be worth a couple of thousand.

Sorry NFS I don't quite understand what you mean as I thought that any rebates weren't possible in my scenario. If you could enlighten me with an example?? As I do 30k miles it may be worth something!

[AlanQS]

A bit long winded but:

If you have your own car but don't get a car allowance you should be entitled to 40p per mile from your employer for the first 10,000 miles and 25p thereafter. A lot of tight wad employers won't pay that rate but mostly it's where people don't do many miles.

If you have your own car and you get a car allowance, most companies pay you an approximation of the fuel used on business mileage - say 14p per mile.

Do 10,000 miles - receive £1,400 in tax free expenses from Employer. Since you get a car allowance already, your employer doesn't pay for any other aspect of car running costs. You pay tax on this car allowance.

The profit related car scheme allows tax exemption of 40p for the first 10,000 miles = £4,000. Deduct the £1,400 received from the employer and you are entitled to a tax rebate on £2,600 of earnings which represents £520 if you pay tax at 20% and £1,040 if you pay tax at 40%.

Getting to the point now: Some people with company cars who pay their own fuel also get 14p a mile for business journeys and they argue that because they pay tax in the guise of Benefit in Kind, they should also get a tax rebate in a similar manner to the quoted situation. It doesn't sound right but I understand some have tried it on with HMRC but I don't know if they got away with it.

In your case, you have no chance whatsoever. Your company pays for absolutely everything then deducts your private fuel usage so you can avoid BIK charges.

NFS: Last I looked, the fuel benefit in kind was a fixed amount so didn't work out in your favour unless and until you were doing a substantial private mileage (somewhere around £1,600 extra tax per year which would represent, at current petrol prices and average mpg, about 12,000 miles per year).

Edit: I've just checked. The Benefit in Kind for my car for the coming tax year for fuel is £3,042. Taxed at 40% would represent £1,216 additional tax. Clearly, if you are someone who does not do more than about six or seven thousand private miles, buying the fuel yourself would be cheaper. In the last twelve months (using current fuel costs) my total fuel bill (work and private) was £1,138 which means that I would be better off NOT taking free fuel from my employer.

Clearly, if you are doing 12,000 miles a year on private mileage then it is just beginning to start to be worthwhile.

[NFS]

Originally Posted by ShereKhan

Sorry NFS I don't quite understand what you mean as I thought that any rebates weren't possible in my scenario. If you could enlighten me with an example?? As I do 30k miles it may be worth something!

There is no rebate in your CURRENT situation as you have a company car.

However, if you took the cash instead it would work like this:

1. Cash Allowance = £ 3500 or £ 175 per month after tax (at the higher rate - 40%)

2. Assuming your employer continued to pay for your business fuel by credit card, you could claim a further £ 178 a month in mileage allowance relief (based on 30k miles / year)

3. If you did not have a company car, you would pay £ 127 a month less in tax (based on a 320i msport)

So ... you in your case you would have about £ 481 a month to finance, tax and insure your car. Probably not worth it in your case as you would need to wait till the year end to get the £ 178 mileage allowance relief and would be left short in the meantime.

The calculator at www.lvl.co.uk covers this situation.

[NFS]

Originally Posted by AlanQS

NFS: Last I looked, the fuel benefit in kind was a fixed amount so didn't work out in your favour unless and until you were doing a substantial private mileage (somewhere around £1,600 extra tax per year which would represent, at current petrol prices and average mpg, about 12,000 miles per year).

Edit: I've just checked. The Benefit in Kind for my car for the coming tax year for fuel is £3,042. Taxed at 40% would represent £1,216 additional tax. Clearly, if you are someone who does not do more than about six or seven thousand private miles, buying the fuel yourself would be cheaper. In the last twelve months (using current fuel costs) my total fuel bill (work and private) was £1,138 which means that I would be better off NOT taking free fuel from my employer.

Clearly, if you are doing 12,000 miles a year on private mileage then it is just beginning to start to be worthwhile.

But .. if you use your own car and receive free private fuel from your employer, the company car BIK rules don't apply.

You just have to declare the cash value of the fuel received as a benefit in kind and will be taxed on this amount.

In effect this means that I receive my private fuel at a 60% discount.

It's a nice way for employers to beat the system and provide people with a 'fully expensed car' without the tax downsides.

The other nice aspect is that it costs me nothing during the year. Confuses HMRC a bit though (although they have agreed it's all right and proper).

[AlanQS]

Ah, I get it. That's not bad at all!

[ShereKhan]

Originally Posted by NFS

There is no rebate in your CURRENT situation as you have a company car.

However, if you took the cash instead it would work like this:

1. Cash Allowance = £ 3500 or £ 175 per month after tax (at the higher rate - 40%)

2. Assuming your employer continued to pay for your business fuel by credit card, you could claim a further £ 178 a month in mileage allowance relief (based on 30k miles / year)

3. If you did not have a company car, you would pay £ 127 a month less in tax (based on a 320i msport)

So ... you in your case you would have about £ 481 a month to finance, tax and insure your car. Probably not worth it in your case as you would need to wait till the year end to get the £ 178 mileage allowance relief and would be left short in the meantime.

The calculator at www.lvl.co.uk covers this situation.

Thanks NFS

Taking away insurance that would mean I have £481 to finance, tax and to service is that right?

I assume if business miles goes up or down the mileage relief is adjusted

[NFS]

Originally Posted by ShereKhan

Thanks NFS

Taking away insurance that would mean I have £481 to finance, tax and to service is that right?

I assume if business miles goes up or down the mileage relief is adjusted

If your employer continues to insure I think that would also be considered a benefit in kind and you would cop for 40% of the cost of the policy.

And yes the mileage rebate will reduce if your mileage reduces.

The main problem is that HMRC can be slow to give the rebate and in my case will not code it in. That means you have to wait until the end of the year to get your mits on it.

Since in your case it's a significant proportion of the amount you have for the car that might be a problem.

[AlanQS]

Some companies will insure your car for the business aspect like my last one and they definitely told me that was not a benefit in kind. As for all the insurance - don't know. I wouldn't report it if they didn't.

[NFS]

Originally Posted by AlanQS

Some companies will insure your car for the business aspect like my last one and they definitely told me that was not a benefit in kind. As for all the insurance - don't know. I wouldn't report it if they didn't.

In honesty I don't think it is a benefit in kind, but it is a bit of an odd one and I reckon HMRC might get a bit muddled over it.

I think that the argument is that insurance of a car for business use is an 'allowable business expense', because it is 'wholly and exclusively' related to the performance of that persons job.

The fact that the insurance also covers the car for any private use is purely incidental and obviously the owner can't take out his own policy because it would be wrong to insure the same asset twice.

[ShereKhan]

Hmm I never knew about BIK for insurance. Never been told by employer.

My car is basically covered by an company backed fund of £50k then after that an insurance policy covers me and two other drivers who I nominate.

So that could be two people who can drive my car for SDP. I'd get the same if I got my own car (if I opt out).

[NFS]

Originally Posted by ShereKhan

Hmm I never knew about BIK for insurance. Never been told by employer.

My car is basically covered by an company backed fund of £50k then after that an insurance policy covers me and two other drivers who I nominate.

So that could be two people who can drive my car for SDP. I'd get the same if I got my own car (if I opt out).

I think Alan is probably correct that this is not a benefit in kind.

[Looney Toon]

Originally Posted by AlanQS

Some companies will insure your car for the business aspect like my last one and they definitely told me that was not a benefit in kind. As for all the insurance - don't know. I wouldn't report it if they didn't.

I've never reported Insurance on staff P11D's as a benefit in kind, and I'm sure my Auditor's would have picked this up if it was incorrect over the last 15 years. IMO it's a pure business expense.

[NFS]

Originally Posted by Looney Toon

I've never reported Insurance on staff P11D's as a benefit in kind, and I'm sure my Auditor's would have picked this up if it was incorrect over the last 15 years. IMO it's a pure business expense.

Nice to know.