I have a client who gets a car allowance and has a fuel card which he pays a BIK on the private element. He Is adamant that he can claim his business mileage for the year at the approved rates as well. I don't think he is correct. Can someone please point me in the right direction? Thanks!
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If the business mileage is getting paid for by the business, what cost has he incurred that he is trying to get personal tax relief on?
Please clarify
Do you mean claim the allowance from his employer, or claim for tax relief from HMRC?
For starters ...
... are you happy that the payments via the fuel card are being taxed (and NI'd) correctly?
Yes the employer has treated it all correctly and I'm satisfied with that. He seems to think that the company have told him to do it (it's a large multinational company) and that he has done it for years but I agree with mrme89 as there is no cost incurred to him.
He's not having it and wants me to send him the rules from HMRC m
Presumably
the claim should be for the difference between the 45/25p mileage rate and the fuel that has been reimbursed for the business miles.
The car allowance is a red herring as it should have been taxed when paid.
He provides his own car.
The company gives him a fuel card and he is taxed on the private miles
As it stands he has been reimbursed the fuel for business miles, by being taxed on private miles charged on the fuel card, but has had no reimbursement for wear & tear and other running costs he incurs
The client (and Paul D Utherone) is correct.
However, claiming the tax relief from HMRC is to be avoided, if possible, as it is not usually very tax efficient. It would be better for the employer to pay the HMRC approved mileage rates and deduct the total from the fuel card balance. No BIK, unless the private mileage ratio is high.
A problem is likely to be that if might cost the employer more money. The car scheme probably needs re-drafting.
Is that right?
Employer pays for all fuel, via fuel card. There is no reimbursement involved. Prima facie, there is a benefit in kind on the full cost of the fuel (though I'll be happy to accept a valid explanation as to why that is not the case). The amount paid in respect of business fuel cannot be treated as an authorised mileage payment because it is not paid to the employee.
I agree with the preceding suggestion that the best option would be to pay the full authorised mileage allowance, net of the total fuel card payments.