Is it a benefit-in-kind or is it salary?

Is it a benefit-in-kind or is it salary?

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An employee uses their own car.  As part of calculating their salary is an element for "oh, and we acknowlegde you will be using your own car so....".  This is subjected to tax and NIC simply as part of the salary.

The company also provides a company fuel card to the employee.  The employee is NOT required to repay any private fuel.  Will the employee be subject to the calculated fuel benefit in full on their own vehicles CO2 etc rating OR will the private fuel cost be deemed an expense paid by the company for the employee and it subject to tax and NIC as "additional salary".

Is the situation different is the employee submitts, and is reimbursed for, all his fuel receipts to the company rather than charging all the fuel to a company fuel card?

My reasons for asking is that much of the text on these subjects are either that :-

a) fuel benefit is often spoke of on the assumption its paid for a company car, and

b) explaining the management where there might be a difference between an expense directly contracted by the company and/or an expense reimbursement.

The question has arisen as a new "business mileage" scheme is being discuss and certain employees are stating that historically part of their (verbal) contract was that the company would give them a fuel card to get back and to from home to work.

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By George Attazder
19th Sep 2011 12:21

You've potentially got a bit of both

First important point to make is that you can't get a fuel scale charge without first having a car benefit charge (unless the amount of the car benefit is nil).

The fuel card is a credit token and (absent a company car to which it can be related) all amounts are reportable on the P11D.  Employee would then have to claim mileage relief for business miles.

Any payment to the employee for private mileage (including commuting) is taxable/NICable through payroll, as is any flat-rate payment included in/paid with salary.

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Replying to Flying Scotsman:
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By MikeJT
19th Sep 2011 14:30

Clarifying the outcome

George Attazder wrote:

First important point to make is that you can't get a fuel scale charge without first having a car benefit charge (unless the amount of the car benefit is nil).

The fuel card is a credit token and (absent a company car to which it can be related) all amounts are reportable on the P11D.  Employee would then have to claim mileage relief for business miles.

Any payment to the employee for private mileage (including commuting) is taxable/NICable through payroll, as is any flat-rate payment included in/paid with salary.

 

So if I understand what you are saying:-

1. As there is no company car, there is no car benefit and therefore no fuel BIK

2. If the company reimburses the employee for petrol receipts etc then the amount reimbursed would be subject to tax and NIC as an additional amount in the payroll and the company would have to be employer NIC on it.  Presumably the tax and NIC will eat into the amount due, or the company would have to "gross-up".

3. If the company continues to go the fuel card route, it will be disclosable as a B-in-K on the employees P11d.  The company will have to pay class 1a NIC on it.  The employee may be able to claim a deduction for the actual BUSINESS miles they cover in the year.  BUT.... does this mean that there is a class 1 employee Ni saving.

Have I understood that correctly?  By the company paying the fuel card bill there is a "saving" of the employee NIC and also the company doesnt have to "gross-up" the payment (IYSWIM)

 

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By George Attazder
19th Sep 2011 15:27

Apparently not

I'd not previously considered the point of a fuel card without a company car, but since it can only be used to purchase fuel, it's not "money's worth", and so isn't S.62 earnings.

However, looking at the P11D, it should go in box C which isn't subject to Class 1A.

So, looking at CWG2 (pages 85/86) it seems you should NIC (but not PAYE) the amounts at the date you decide to not seek reimbursement.

Don't forget the VAT aspects; either:

don't recover input VAT in respect of private mileage.account for a VAT fuel scale charge.

I can confirm the first point, that you don't have a fuel BIK, other than on a company car.

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