MegaSack DRAW - This year's winner is user - rgwb
We will be in touch
Asking for a friend.
They have a company car and currently pay 10p per mile for private use (along with the normal tax for said car).
Every month they get told that the average private mileage for a company car is 400 miles.
They do on average around 150 private miles per month as they do a lot of business miles and really don't want to drive when not working.
They have just been told that they need to sign a form enabling their employer to stop just over £40 a month for private use of the car.
Seems to me they are being charged for 400 miles despite only doing 150.
Is this legal?
Should they sign it?
So they want your "friend" to finance their work milage ?
They would be told to poke it..
Much like when my company who don't pay me a car allowance tried to say I couldn't use my car for client meetings.
That's surely not enforceable? I'd sign it, but only for, like, a 1k rise.
To keep HMRC happy it is best for employee and employer if they record private and business mileage and pay for the actual private miles traveled each month in arrears based on that record. The real cost per mile may also be higher than 10p depending on car etc but not much more. HMRC will have a Good case for BIK non compliance if they are charging employees for 400 miles a month when they might be doing 1000+
A very good point about HMRC charging in arrears for private miles.
That's what happens at the moment and they are even fitting trackers to "prove" what the actual private mileage is. Or so my friend tells me.
I will advise them to raise this point.
Im confused. Are they installing trackers to monitor them when they use the car privately?
Do they have a fuel card for the car. Do they claim business milage back?
They were told that trackers were being installed as this was the only format HMRC would accept for proof of private and business mileage...
Fuel cards are used.
Private mileage is paid for each month.
If trackers are being installed to accurately record private mileage, I'd protest vehemently against a blanket private mileage charge.
I believe it’s illegal for companies to track your whereabouts whilst not at work. I stand to be corrected however but I believe it’s an invasion of ones privacy.
If they are fitting trackers then they will get real data about the private use of the vehicle so the arbitrary £40 a month is a load of bollocks and I would tell them that. Also tracking you when travelling privately is on shaky ground as its a violation of privacy.
If your friend isn’t getting value out of the vehicle then he can opt out of private use and pay no bik or fuel. The tracker can be used as evidence to HMRC that he has no private use of the vehicle.
I believe it’s illegal for companies to track your whereabouts
But they're not tracking the person, they're tracking [i]their own[/i] car.
Who do you think is driving it? And it's not theirs, it's leased.
I have been told they can switch the tracker to private for private use and it records distance but not location
Where would they stand if they refused to sign for this charge?
With all the companies I have worked at you send a daily mileage sheet once a month, which shows business and private mileage in separate columns. You are then deducted the private mileage payment from your monthly salary. Please mention to your friend if they are not using their company car for private use they car inform the employer/tax office, and then won’t need to pay the BIK tax or private fuel deductions.
I believe it’s illegal for companies to track your whereabouts whilst not at work.
They record distance not location.
Where would they stand if they refused to sign for this charge?
With these things from experience, it depends on his standing in the company and how others feel. I'd suck it up and make sure I used double the amount. But I'm a git like that.
Hand the car back - you are already paying BIK on it - the 10p charge is taking the piss. Tell them to supply a pool car in future.
HR will get away with what ever it can ....
When I had a company car, would record all the business miles for the month, the fuel used would then be split business/personal, so you paid for what you used.
Their scheme smacks of laziness.
They record distance not location.
Don't all cars have one of those already?
10p a mile is pretty reasonable if he's using a fuel card. It seems like the company has set a standard range possibly to avoid employees having to pay bik for the fuel (not sure if this works, but if they're paying for it, it would work). Most employees will do >400 miles I expect so its a winner for them. If you do less than 400 miles, and want to pay less, it seems reasonable to sign something so they can slot it in their records if the tax man comes checking
I take it the car is fully expensed. i.e. the company are paying for the lease and all fuel.
Opt out of the fuel part if possible and then claim for business mileage from the company.
I have a company car that I pay BIK tax on but I do not have a fuel allowance. I pay for all my own fuel and then claim the current HMRC Advisory Fuel Rate (currently 9p/mile) for the business miles I drive.
I once did the maths for a very cheap to run car (Yaris diesel) over my 95k mile ownership....22p per mile. I reckon a standard run of the mill small car like a newish Focus would be 35-40p per mile. On that basis, the £40 a month for 150 miles is cheap as chips, however if others do 400 miles for the same cost I get that it is unfair. Perhaps refuse to pay it and leave the car at his place of work each day and commute in (and within a month he/she will probably be clammering to pay only £40 for the day to day use?)
Including depreciation most new cars cost over £1/mile to run.
It's complicated, that's why fuel and cars are separated out to try and get some clarity.
It's worth noting that if HMRC come sniffing, it's not the company that will be stung for unpaid tax, it'll be the driver.
The word average is significant; if your chum is well below, others will be well above; someone will be getting a benefit with no downside and the HMRC won't like that one bit.
It's laziness from payroll; it's not hard to make an adjustment every month, it just takes a bit of time.
If I don't get my mileage in within 2 days of the end of the month I will get a stroppy email threatening me with tax!
Just been informed by my friend that the company accountant had set the email out in error and it's been retracted...