Very simple question about employees tax relief

Please confirm I've not missed the point before I weigh in and tell HMRC they're wrong

Didn't find your answer?

Client is an employee who incurs a lot of business miles in his own car.

His employer gives him a fuel card, this is included on his P11d and in his tax code - I have seen both and he is definitely paying tax on the fuel card.

We have put in an expense claim via a P87 for his business mileage at 45p.

HMRC has responded to say that he is not entitled to "claim any further tax relief for mileage" as "your P11d shows that you have received a fuel card from your employer.  This is included in your tax code as a deduction and you will pay 40% tax on the deduction".

But actually he's not receiving any tax relief for his mileage is he?  Am I missing something?

 

Replies (13)

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By Sue Mitton
29th Nov 2016 10:57

You don't say exactly what is on the P11d or on his tax code. On the presumption that he is being taxed on the fuel benefit - this is tax to be paid on personal usage fuel.
If all the fuel used is paid for via the fuel card - then he isn't paying for any fuel for his car. Therefore nothing to get tax relief against.
The problem I see for your client is that he is not being re-imbursed for other usage of his car - depreciation, repairs etc, which the 45 pence is also expected to cover.

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By SWJWBA
29th Nov 2016 11:10

As far as I can tell from your information I think you are right to argue it and you are not missing anything. The benefit on the P11D is because the employer is paying for all fuel and has been given no records/information from your client to do anything else.
As long as the mileage claim is accurate this is what any employee could claim for business use up to 10,000 miles. There is nothing as far as I can see that says the 45p rate should be discounted if he only pays tax on the fuel benefit rather than the full cost. Any surplus benefit is taxable at his highest tax rate. The benefit and expense claim are two separate items.
I cannot see a problem here other than whoever is dealing with it at HMRC does not understand.
Ask for a higher grade officer to look at it.

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Stepurhan
By stepurhan
29th Nov 2016 11:10

Not come across such an arrangement before.

The normal arrangement when using a personal car for business is that the employer reimburses for business mileage only. Anything up to the accepted rates (45p per mile for first 10,000 and then 25p per mile thereafter) is tax-free. If they are paid less than this, an expense claim for the shortfall can be made.

However, as Sue Mitton has pointed out, that mileage rate covers all costs, including fuel. The business fuel is paid for in full already, and so you cannot claim the full mileage rates. The thing you are potentially missing is in thinking the fuel benefit covers ALL fuel (which would then logically lead to an allowable deduction for business mileage). As Sue Mitton has also already said, it is a benefit for personal fuel only.

There might be some mileage (if you'll pardon the pun) in making a claim for the full mileage rate less the advisory fuel rates. This would effectively be claiming for the part of the mileage rate that does not relate to fuel. As I said, not come across this arrangement so I don't know if such a thing is possible.

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By SWJWBA
29th Nov 2016 11:14

The original question said that he has a benefit on the provision of a fuel card (not part or all fuel) so the taxpayer is presumably using it for all the fuel that the employer allows to be expended upon it.

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Replying to SWJWBA:
Stepurhan
By stepurhan
29th Nov 2016 11:28

SWJWBA wrote:

The original question said that he has a benefit on the provision of a fuel card (not part or all fuel) so the taxpayer is presumably using it for all the fuel that the employer allows to be expended upon it.

Whilst the OP does say that, excepting other uses, the fuel card should have been accounted for as a fuel benefit. It is paid for by the employer and can only be used for fuel, so it is effectively the employer paying for all fuel. How do you think it would have been shown on a P11D?

Only the OP can confirm it is has been recorded as such. On the, not unreasonable, assumption that it was recorded as a fuel benefit, my advice still stands.

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Replying to stepurhan:
Portia profile image
By Portia Nina Levin
29th Nov 2016 11:42

NO it should not.

A fuel benefit can only arise if there is a car benefit, and the OP is clear that the individual is using his own car. So there is no car benefit, which means that there is no fuel benefit.

If the employee is using their own car, then the legislation automatically entitles them to make a mileage claim at 45p/25p. No ifs and no frigging buts.

Because of all of those things combined, it is correct for the employer to put all of the expenditure on the fuel card on the employees P11D.

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By SteveHa
29th Nov 2016 11:27

What we don't know is what is reported on the P11D. The total costs on the fuel card, or only the proportion used for private mileage.

If the total cost is reported, then I see no problem claiming the full £0.45 per mile for business miles. If only private use is reported, then work out what is effectively reimbursed per mile and claim the difference.

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By SWJWBA
29th Nov 2016 11:34

Hi all- just goes to show doesn't it whenever someone says "it's a very simple question" we all know that is unlikely! Tax is anything but simple, lacks joined up thinking both within the same tax and across all taxes and hence why they dropped the word "simplified" when they first introduced self assessment!
Interesting as always to hear everyone's views.

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Portia profile image
By Portia Nina Levin
29th Nov 2016 11:43

@ OP. I can confirm that you are correct.

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By Manchester_man
29th Nov 2016 12:36

Treacle toffee anyone?

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By Sarah P
02nd Dec 2016 10:17

Thank you all for your contribution to an unexpectedly animated debate :-)

To confirm - the whole fuel card cost is shown on the P11d, not just the personal use. I will revert to HMRC and ask for a higher opinion.

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Replying to Sarah P:
Portia profile image
By Portia Nina Levin
02nd Dec 2016 10:50

Sarah P wrote:

I will revert to HMRC and ask for a higher opinion.


How dare you!
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Replying to Portia Nina Levin:
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By Sarah P
02nd Dec 2016 10:59

Portia Nina Levin wrote:

Sarah P wrote:

I will revert to HMRC and ask for a higher opinion.

How dare you!

I am feeling a little 'Devil may care' today

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