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Fuel card provided for use in private car

Employer has provided a fuel card for an employee with a private car

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Not sure if it is the result of ploughing through self assessment tax returns for the last few weeks that has scrambled my brain, but this has got me stumped.

The company has provided a fuel card to an employee for a car that is personally owed by the employee. The full cost of the fuel spend has been included on the employees P11d and then, as per the car scheme rules, a personal contribution of 15p per mile has been made by the employee based on the number of business miles recorded in the year. The car scheme document states that this reimbursement rate has been agreed with HMRC.

The employee has also been reimbursed through payroll at 15p per mile for each business mile that has been recorded (uncapped). The employee also then receives a running cost of reimbursement of 25p per mile but this is capped at 7,000 miles in the year.

The employee has done 19,374 business miles in the tax year and 10,701 personal miles. It would appear that the employee can make a claim on their SA tax return for their business mileage as they have exceeded the 7,000 cap. Is it simply a case of claiming the excess over 7,000 miles at 25p or is there more to it than that?

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By Accountant A
17th Jan 2020 21:46

I thought first 10,000 miles was 45p (since 2011/12)?

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Replying to Accountant A:
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By Kbab8mjg
17th Jan 2020 21:57

I'm well aware of the first 10,000 being at 45p and the remainder at 25p. What is throwing me is that the company has made a 15p reimbursement for mileage and a capped 25p reimbursement for running costs (as well as the employee making a 15p personal contribution to reduce the BiK)

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By lesley.barnes
18th Jan 2020 09:23

I'm not sure they could have made it much more complicated and it doesn't sound right or I've not got the gist but here goes. If I break it down ..
The employee has been taxed on all the fuel on his p11d.
He has then received 15p a mile for business from his employer.
He has paid the employer 15p a mile back based on business miles. So that puts him back to nil?
He then gets 15p per mile through payroll - which will be taxed as extra employment income?
He has then got 25p a mile for business miles from his employer for 7000.
Is the calculation not 45p for 10,000 then 25p for the rest less the 25p for 7000 miles assuming if he's been paid through payroll it has been taxed?

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Replying to lesley.barnes:
RLI
By lionofludesch
18th Jan 2020 09:41

lesley.barnes wrote:

He has then received 15p a mile for business from his employer.
He has paid the employer 15p a mile back based on business miles. So that puts him back to nil?

That bit looks like blocks to me.

Is it not .....

1. He's paid tax on all the fuel via his P11d.

2. He gets 15p a mile for business miles.

3. He can claim tax relief on the other 30p/10p via his tax return.

Correct me if I'm wrong because it's clear as mud.

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Replying to lionofludesch:
Psycho
By Wilson Philips
18th Jan 2020 10:35

I agree that it’s a very convoluted arrangement. The payments for running costs are not, on the face of it, AMPs. I don’t have time but there is useful HMRC guidance.

So, as I see it:

Full BIK on fuel less contribution from employee

All payments from employer taxed via payroll.

Employee makes full claim via SA at 45p/25p on total mileage.

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Replying to lionofludesch:
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By lesley.barnes
18th Jan 2020 10:49

Yes you are right it is blocks. I'm sure when I first read it there was a line in that said the 15p was paid back based on business miles but perhaps I need a lie down in a dark room. It was this bit that threw me - shuffles off to the kitchen for a coffee.

" the company has made a 15p reimbursement for mileage and a capped 25p reimbursement for running costs (as well as the employee making a 15p personal contribution to reduce the BiK)"

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Replying to lesley.barnes:
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By Kbab8mjg
18th Jan 2020 12:27

Thanks to everyone for their responses, it's a very convoluted scheme that I probably did not make a great attempt at articulating at the end of a long day!

Essentially,

On the P11d for the employee, he has been charged for the full cost of the mileage on the fuel card - personal and business. On the P11d there is then an amount made good deduction of the 19,371 business miles at 15p, this has been deducted through the payroll.

Through the payslip each month the employee has been paid 15p per mile for all business miles. Net result is an equal opposite payment and deduction of 15p per business mile on each payslip.

On top of this, there is a 25p per mile running cost payment that is paid to the employee via the payroll ,but this is capped at 7,000 business miles per year. The driver also then gets a running cost deduction through the payroll too based on the type of vehicle they drive.

Seems a mind blowingly complicated and not a scheme I've ever come across before.

My thought is that the driver can claim 45p per mile for the first 10,000 and 25p thereafter but I must then deduct the 15p per mile paid for the business mileage and also deduct the 25p per mile running cost payment that they have also received.

Thoughts gratefully received.

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Replying to Kbab8mjg:
Psycho
By Wilson Philips
18th Jan 2020 13:12

Can someone explain the purpose of the 15p? It seems to me that the contribution by the employee reduces the taxable benefit but the reimbursement by the employer simply negates that so he ends up being taxed on the full amount anyway.

I stick with my thoughts above.

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Replying to Wilson Philips:
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By Tax Dragon
18th Jan 2020 14:11

NI saving?!

(I'm not saying there is one - I can't work out the transactions - but there must be some reason for the convolution.)

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Replying to Tax Dragon:
Psycho
By Wilson Philips
18th Jan 2020 18:15

If anything I’d say there is an NI cost but it’s not my problem so I’m not going to torture myself trying to work out exactly what is going on. It seems to me that the 15p contribution/ reimbursement is swapping a Class 1A liability for a primary and secondary Class 1 liability

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Replying to Wilson Philips:
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By Tax Dragon
18th Jan 2020 18:12

Well whatever it was that was going on, it didn't 'feel' NIC neutral.

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Replying to Wilson Philips:
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By Tax Dragon
18th Jan 2020 18:18

Well whatever it was that was going on, it didn't 'feel' NIC neutral.

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