BlkKnight

Morning all.

My GF has recently been given a company car (Corsa 1.7TDi 2004).

We've just has her tax assessment through and it strikes me as a little odd, perhaps somone on here can help explain?

Basic Salery XXXX
Company car £2300
Fuel allowance £1900

Her contract stipulates that she is only allowed to do 6000 (personal) miles per annum. Any mileage after that she has to pay £0.15 per mile.

In my mind the fuel allowance seems a bit excessive for 6000 miles (or doesn't it work like that?)

Any advise would be appreciated.

dsmith

Presumably she gets a fuel card or does she simply claim back her fuel ?

Lower rate tax = 22%, so she pays .22*1900=£418 for 6000 Miles.
Higher rate tax = 40%, so she pays .40*1900=£760 for 6000 Miles.

If she gets 50 mpg from the corsa, 6000 Miles = 120 Gallons. = 546 Litres

So she's paying (equivalent of) 76p / litre if she's lower rate tax or £1.39 / litre if she's top rate tax.

For the .15p/mile part. Again assuming 50 mpg, that equates to paying £1.64 / litre.

So if she's paying low rate tax and and does exactly 6K miles then you come out slightly ahead. Anything else and yes you're paying over the odds for your fuel.

BlkKnight

Ah that makes more sense. I just didn't comprehend where the £1900 came from.

She's on the 22% bracket - and does about 45 MPG.

I guess she will do marginally more than the 6000 miles - but not by a massive amount.

dsmith

The actual 1900 figure is set by the Government.

"Car fuel benefit" is defined as a fixed benefit and is calculated as £14,400 x Comany Car % (i.e. the same %figure used to calculate the actual company car tax aswell).
HM Revenue & Customs: Car fuel benefit: conditions

So the benefit of free fuel for the corsa is fixed @ £1900. You pay tax on that benefit.

The 6000 mile + Excess mileage figure are down to her company.