Company is giving two employess fuel cards to cover both business and private mileage. Employees will NOT be asked to reimburse the company for private fuel. Employees use their own vehicles.
Issues here as far as I can tell are:-
1. (easiest first) Fuel scale charge will apply for each car
2. Each employee will be taxed on the expenditure on the fuel card via section C of form P11d. I ASSUME IF THEY CAN SHOW THE BUSINESS / PRIVATE SPLIT THEN ONLY PRIVATE WILL BE DECLARED / TAXED AND I ASSUME IT WILL BE THE GROSS AMOUNT (ie including VAT)
3. Each employee will pay NI on the expenditure via the payroll. Again, I assume the amount to be added will be gross amount (ie including VAT) and I assume the procedure will be to added the fuel expenditure to the gross wage to calcualte the NI and then to deduct the same figure from the net wage as its already been "paid"
Am I correct?
Replies (8)
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I may be wrong but...
... my understanding of the legislation is that the full amount of expenditure on the card (including for business mileage and including VAT) falls to be treated as a benefit and the employee can then claim expenses (mileage allowance relief at 45p/25p per mile), which then means that Class 1 NIC is charged on the whole expense incurred on the fuel card.
When you say fuel scale charge, I assume that you mean VAT fuel scale charge. You are correct, in that case, but may want to consider only reclaiming VAT on the business fuel as an alternative.
confused
mike-
re 1 as the cars are the individuals - there is NO fuel scale as this relates to CO CARS so surely no other deductions , VAT corp tax, depreciation/allowance etc
re 2 +3 should the value incl vat not just be payrolled monthly ? ie- charged to paye + ni + ers ni [ under your approach ] and then end of matter for the co ? the employee then could if they retain sufficiently accurate records, on their own personal tax returns, make a claim for mileage. Why would the Co also entertain a mileage claim[george above ] on top of having paid the full fuel
of course not using the fuel card for 100% fuel gives other options
employee could reimburse the full fuel card, less the private mileage claim or deduct with consent full fuel card form payroll and receive mileage claims at HMRC rates
@kiwi
I wasn't suggesting that the employees be reimbursed mileage by the employer as well as having private fuel paid. My view is that the use of a fuel card (a credit token) gives rise to a BIK to the extent of all expenditure incurred on it (including business fuel), but that for tax purposes the employee can make an expense claim for the business miles.
This ends up giving a bad NIC position on the proposal as suggested though. IMHO.
I agree that there's no fuel benefit, as they're not company cars, but I do think Mike is talking about VAT fuel scale charges (that do still arise if employee private petrol is paid for and input VAT claimed thereon).
That's correct...
... they can either make their mileage claims through a Tax Return of through HMRC's claim form P87. http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=lNKqI3HRKkQ&formId=769
However, the most significant thing is that the employer (and the employee) will end up paying NIC on all the fuel (not just the private fuel) if you go down this route.
I'd have thought...
... that the payroll approach you're suggesting with a formal claim (to the employer?) would end up saving everybody money. Every time I think about it, the provision of a fuel card to someone without a company car, just seems to get worse and worse.