rajrana
Financial Controller
Healthcode Ltd
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Private mileage

Private mileage

A staff member has a company car which is fully maintained & fuelled (both business & private). She now wants to opt out of being paid for fuel for all private mileage. What is the best way to go about this?
Raj Rana

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By ACDWebb
14th Oct 2008 13:04

Whoops!
Indeed apportionment available since 6/4/03 the exception being if private fuel is reinstated latrer in the year, or commences part way through the year

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By Anonymous
14th Oct 2008 12:51

VAT
The company can reclaim VAT on the mileage it pays to the employee as long as the employee provides sufficient invoices to prove that at least that amount of fuel has been purchased. The company must keep the fuel invoices, but does nothing with them apart from keep them. The claim is then 17.5/117.5 x the fuel rate paid to the employee.

The problem with invoicing the employee for private fuel is that it is very hard to prove that the invoice is complete. The employee would have to maintain meticulous mileage records for ALL journeys for this to work. It is better to approach it form the other direction and have the employee pay for everything and then reclaim for proven business mileage.

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By Anonymous
14th Oct 2008 12:41

Are there VAT implications?
I was wondering whether there are any VAT implications to take into consideration?

If she pays all fuel privately, then the Company cannot reclaim any input VAT.

Would it be better if the company continues to pay all fuel, claiming all the input VAT and invoicing for private use, declaring relevant output VAT?

I'm assuming the company is VAT registered.

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By Anonymous
14th Oct 2008 12:26

Stop paying for fuel
She should pay for all fuel privately. The company can then reimburse her for fuel for business miles at the approved HMRC rates, found here:
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

The rules changed a while ago so you can pro rata the fuel benefit if you stop providing fuel part way through the year, so there is no need to wait until 5 April any more.

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By ACDWebb
14th Oct 2008 11:47

Do it
at the end of the tax year or on a change of vehicle otherwise a full years fuel benefit will be charged unless all private fuel is repaid to the firm.

Institue a mileage reclaim rate following HMRC agreed rates - Check HERE

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