Petol Card & Tax implications?
08 August 2007, 04:12 PM
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Petol Card & Tax implications?
Been offered a new job and this company offers a car or car allowance & petrol card.
Now I'm happy with my car
but when in the interview I was told by the chap that it wouldn't be in my best interests to have a petrol car as I only live 12 miles from the office and they only pay for commuting petrol and business miles.
However, I've just had the contract of employment through and it states that "the company will pay for business miles and reasonable private use. Employee will be taxed for fuel used for private use and in the event of a dispute over what constitutes 'reasonable private use' the Employer's decision is final".
I've had a fuel card before with a previous company, and I remember that the tax I had to pay on my private miles was far far less than the fuel would have actually cost me. I've even found the old calculations that were given me to work out if it would be cost effective.
If I've done them right then based on my 10k miles a year (2k business miles inc) then I'd only be taxed by about £318?!?
Can anyone help or advise? I don't know anyone who I could ask and I need to return the contract by Monday (so need to raise any queries quick sharp!)
Matt
Now I'm happy with my car
but when in the interview I was told by the chap that it wouldn't be in my best interests to have a petrol car as I only live 12 miles from the office and they only pay for commuting petrol and business miles.However, I've just had the contract of employment through and it states that "the company will pay for business miles and reasonable private use. Employee will be taxed for fuel used for private use and in the event of a dispute over what constitutes 'reasonable private use' the Employer's decision is final".
I've had a fuel card before with a previous company, and I remember that the tax I had to pay on my private miles was far far less than the fuel would have actually cost me. I've even found the old calculations that were given me to work out if it would be cost effective.
If I've done them right then based on my 10k miles a year (2k business miles inc) then I'd only be taxed by about £318?!?
Can anyone help or advise? I don't know anyone who I could ask and I need to return the contract by Monday (so need to raise any queries quick sharp!)
Matt
08 August 2007, 04:22 PM
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I've been running my own car and claiming a mileage allowance for a few years now so I'm a bit out of touch, but I think the amount of tax you pay on fuel for private mileage has shot up in the last few years. It may be better to pay for private mileage.
The AA have a calculator which may help.
The AA have a calculator which may help.
08 August 2007, 04:31 PM
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I had a petrol card a few years ago (sigh...!) - so unless the rules have changed:
Sounds like there's several separate cases here.
- fuel for business miles, which the company pays for. The actual value of the fuel is still regarded by HMRC as being a taxable benefit, so you pay tax on this amount. However, you can then claim back mileage allowance at the fixed approved rate, which should more than offset the tax on the fuel benefit. This is supposed to cover you for brakes, tyres, servicing and the like. (It doesn't - but that's the theory).
- fuel for personal miles that the company deems 'reasonable'. Your company pays for fuel, and you pay tax on this benefit. But in this case you can't claim anything back because commuting isn't regarded by HMRC as business mileage. If you pay 40% tax, then you're effectively getting the fuel at 40% of the pump price, but you pay for your own servicing and depreciation.
- fuel for personal miles that the company doesn't deem 'reasonable'. You just pay for the petrol out of your own pocket at full price.
The car allowance is also just treated as income and you pay tax on it just like your regular pay. Check that the company doesn't stipulate that you must have a car of a particular age and/or type - in my contract I was supposed to require special permission to have a high performance car, but nobody ever actually complained in practise. It was supposed to be less than 3 years old too, and 'suitable' for transporting customers in.
Sounds like there's several separate cases here.
- fuel for business miles, which the company pays for. The actual value of the fuel is still regarded by HMRC as being a taxable benefit, so you pay tax on this amount. However, you can then claim back mileage allowance at the fixed approved rate, which should more than offset the tax on the fuel benefit. This is supposed to cover you for brakes, tyres, servicing and the like. (It doesn't - but that's the theory).
- fuel for personal miles that the company deems 'reasonable'. Your company pays for fuel, and you pay tax on this benefit. But in this case you can't claim anything back because commuting isn't regarded by HMRC as business mileage. If you pay 40% tax, then you're effectively getting the fuel at 40% of the pump price, but you pay for your own servicing and depreciation.
- fuel for personal miles that the company doesn't deem 'reasonable'. You just pay for the petrol out of your own pocket at full price.
The car allowance is also just treated as income and you pay tax on it just like your regular pay. Check that the company doesn't stipulate that you must have a car of a particular age and/or type - in my contract I was supposed to require special permission to have a high performance car, but nobody ever actually complained in practise. It was supposed to be less than 3 years old too, and 'suitable' for transporting customers in.
08 August 2007, 04:33 PM
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The AA calculator is for if you have a company car - NOT the same thing as getting a car allowance (which is taxed as regular income) and buying one yourself.
08 August 2007, 04:39 PM
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Cheers for that. Seems my calculations (or the info) was a little out of date 
. According to that AA site,
Tax Year Taxable Benefit Private Fuel Tax Fuel Cost Per Year
2007/08 £4320 £950 £1647
2008/09 £4464 £982 £1647
2009/10 £4464 £982 £1647
That's a hell of a lot more since I last had one, although I'd still be saving over £600 if I took one (until the company took it off me for 'unreasonable private miles' )
. According to that AA site, Tax Year Taxable Benefit Private Fuel Tax Fuel Cost Per Year
2007/08 £4320 £950 £1647
2008/09 £4464 £982 £1647
2009/10 £4464 £982 £1647
That's a hell of a lot more since I last had one, although I'd still be saving over £600 if I took one (until the company took it off me for 'unreasonable private miles' )
08 August 2007, 04:42 PM
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I had a petrol card a few years ago (sigh...!) - so unless the rules have changed:
Sounds like there's several separate cases here.
- fuel for business miles, which the company pays for. The actual value of the fuel is still regarded by HMRC as being a taxable benefit, so you pay tax on this amount. However, you can then claim back mileage allowance at the fixed approved rate, which should more than offset the tax on the fuel benefit. This is supposed to cover you for brakes, tyres, servicing and the like. (It doesn't - but that's the theory).
- fuel for personal miles that the company deems 'reasonable'. Your company pays for fuel, and you pay tax on this benefit. But in this case you can't claim anything back because commuting isn't regarded by HMRC as business mileage. If you pay 40% tax, then you're effectively getting the fuel at 40% of the pump price, but you pay for your own servicing and depreciation.
- fuel for personal miles that the company doesn't deem 'reasonable'. You just pay for the petrol out of your own pocket at full price.
The car allowance is also just treated as income and you pay tax on it just like your regular pay. Check that the company doesn't stipulate that you must have a car of a particular age and/or type - in my contract I was supposed to require special permission to have a high performance car, but nobody ever actually complained in practise. It was supposed to be less than 3 years old too, and 'suitable' for transporting customers in.
Sounds like there's several separate cases here.
- fuel for business miles, which the company pays for. The actual value of the fuel is still regarded by HMRC as being a taxable benefit, so you pay tax on this amount. However, you can then claim back mileage allowance at the fixed approved rate, which should more than offset the tax on the fuel benefit. This is supposed to cover you for brakes, tyres, servicing and the like. (It doesn't - but that's the theory).
- fuel for personal miles that the company deems 'reasonable'. Your company pays for fuel, and you pay tax on this benefit. But in this case you can't claim anything back because commuting isn't regarded by HMRC as business mileage. If you pay 40% tax, then you're effectively getting the fuel at 40% of the pump price, but you pay for your own servicing and depreciation.
- fuel for personal miles that the company doesn't deem 'reasonable'. You just pay for the petrol out of your own pocket at full price.
The car allowance is also just treated as income and you pay tax on it just like your regular pay. Check that the company doesn't stipulate that you must have a car of a particular age and/or type - in my contract I was supposed to require special permission to have a high performance car, but nobody ever actually complained in practise. It was supposed to be less than 3 years old too, and 'suitable' for transporting customers in.
I was asked what car I drove in the interview (he only seemed concerned that it had 4 doors).
I'm still in the 22% tax bracket (just).
08 August 2007, 04:47 PM
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Please do check that the AA calculator's figures do actually apply to your circumstances before you draw any conclusions from them, though.
Fuel for a "company car" is not treated the same way as fuel paid for by the company for use in your own personal vehicle - even if that vehicle is one that the company helps you pay for by giving you a car allowance.
It looks as though the AA calculator is specifically for if you have a company car - specifically, one which is owned or leased by the company and provided directly to you for your benefit. If the company instead provides you with an allowance which you use to go out and buy your own personal car, then if they also pay for your petrol then that's just income, taxed just like your regular paycheque.
Fuel for a "company car" is not treated the same way as fuel paid for by the company for use in your own personal vehicle - even if that vehicle is one that the company helps you pay for by giving you a car allowance.
It looks as though the AA calculator is specifically for if you have a company car - specifically, one which is owned or leased by the company and provided directly to you for your benefit. If the company instead provides you with an allowance which you use to go out and buy your own personal car, then if they also pay for your petrol then that's just income, taxed just like your regular paycheque.
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08 August 2007, 05:22 PM
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Andy is 100% correct. If you take the allowance and a fuel card, ignore the AA site. You'll get your fuel discounted by whatever your top rate of tax is. i.e. there's no reason NOT to take the fuel card on a private car.
08 August 2007, 05:31 PM
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Ta - I hoped my information wasn't out of date, it was about 5 years ago I left the job that gave me a car allowance and a fuel card.
In fact, if you get your personal mileage paid for as well, there's really no reason NOT to treat yourself to the most hideously thirsty car you think you might ever want to own
In fact, if you get your personal mileage paid for as well, there's really no reason NOT to treat yourself to the most hideously thirsty car you think you might ever want to own
08 August 2007, 05:42 PM
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LOL, yeah true, but they've always got the option of 'reasonable private miles' to revoke it back off me
Seems like I need to have a word with the potential new boss.
Seems like I need to have a word with the potential new boss.
08 August 2007, 05:52 PM
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Sorry for the misleading link. As mentioned, I haven't had a fuel card for a few years and I was aware that tax on private fuel for company cars had increased recently.
Anyway, just goes to show that you should always take advice from well meaning strangers on t'internet with a pich of salt.
Anyway, just goes to show that you should always take advice from well meaning strangers on t'internet with a pich of salt.
08 August 2007, 06:01 PM
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So say I do 10k miles a year, 2k of that is business, so I'll have the benefit of 8k's worth of petrol (8000/25mpg = 320 gallons) x price per gallon (0.969p per litre x 4.54 to change it into gallons = 4.39926) = 320x4.39926 = £1407.7632
£1407.7632 x 22% = £309.70
Is that right?? seems awfully low!
Orrrrr am I meant to take the 22% off the £1407 and pay the difference? i.e. £1098.06?
£1407.7632 x 22% = £309.70
Is that right?? seems awfully low!
Orrrrr am I meant to take the 22% off the £1407 and pay the difference? i.e. £1098.06?
08 August 2007, 07:18 PM
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8k private miles / year @ 25mpg = 320 gallons = approx. 1450 litres
At 96.9p / litre that's £1400 paid by your company at the pumps, so you pay 22% of that in tax which is just over £300 - so your calculation is right for your private mileage. (Yes, it does seem cheap. A fuel card - especially one that's not especially closely monitored by your company's fleet manager - is a great perk, so abuse it!).
For your business miles you'll find yourself paying about another £75 in tax for the fuel benefit, BUT you can claim back 22% of (2000 x 40p) = £176 because you've used your private car for business purposes, meaning you actually save about £100 in tax.
At 96.9p / litre that's £1400 paid by your company at the pumps, so you pay 22% of that in tax which is just over £300 - so your calculation is right for your private mileage. (Yes, it does seem cheap. A fuel card - especially one that's not especially closely monitored by your company's fleet manager - is a great perk, so abuse it!).
For your business miles you'll find yourself paying about another £75 in tax for the fuel benefit, BUT you can claim back 22% of (2000 x 40p) = £176 because you've used your private car for business purposes, meaning you actually save about £100 in tax.
10 August 2007, 12:13 PM
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I have car allowance and a fuel card and bascially I pay 40% of total annual fuel bill.
If you do any business miles during the year you can off set these at ??p per mile and that will reduce the amount of Tax you pay.
If you do any business miles during the year you can off set these at ??p per mile and that will reduce the amount of Tax you pay.
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