Fuel cards and private mileage

Fuel cards and private mileage

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As I understand it there are 2 ways to deal with fuel:

1. Company pays all fuel and employee repays private element

2. Employee pays all fuel and reclaims business element

I assume this is correct?

So now, using option 1:

An employee has a company fuel card and a company car.
The fuel card bill is paid by the company.
The employee submits weekly mileage logs which are reviewed with the split of buiness and private mileage.

Normally the private mileage needs to be paid back by the employee (say this equates to on approx. £5/week and exactly £261.25 per annum)

Instead of asking to pay back the private mileage directly, can I add the total annual amount (£261.25) to his P11d and treat is as a benefit in kind and pay the NI on that?

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By Marion Hayes
06th Jul 2011 16:31

Fuel Benefit

Unless you can show perfectly that 100% of the privately used fuel has been repaid to the Company there is a full fuel benefit for the year. Leaving it owing and a BIK will definitely fail. It is very hard to be sure that you have refunded 100% so it is always better to reclaim mileage for fuel paid for by employee.-- Marion

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By RogerBG
07th Jul 2011 12:54

Fuel benefit

Hi Marion,

answering your points : the logs demonstrate the exact private mileage, so we can clearly demonstrate the amount of private fuel needing to be repaid.

When you say " Leaving it owing and a BIK will definitely fail." What I'm saying is that the company has show this on the P11d as a BIK, and hence the employee is taxed as if they had had this private fuel cost paid by the company. In addition the company also pays the NI.

If you still don't think this satisfies, would it then be acceptable to ask the employee to pay the £261.25 now (3 months after the end of the tax year), and hence deduct it from his net pay?

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By Marion Hayes
08th Jul 2011 20:48

Evening Roger

Sorry my answer was not clear.

In practice I think physical repayment is necessary.

There should be a formal letter on file confirming the need for all private mileage costs to be refunded. A system going forward should show a mileage log going in for May and a deduction from that months salary. HMRC guidance says that the fuel should be repaid during the tax year but as long as there is a defined system in practice I don't think one late refund will prejudice the treatment going forward.

-- Marion

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By MikeJT
19th Sep 2011 11:33

Is it not the case with fuel benefit that the FULL BIK figure is assessed if a single £ of fuel remains as a benefit?

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