Car allowance and fuel card question

A quick question for all the company car users.

I have been offered a car allowance for a new role and with this comes a company fuel card. However, I have a question regarding mileage claims and tax benefits.

If I opt out of the private fuel allowance, i.e. I pay for private mileage at the HMRC advisory rate should this mean I do not pay for the BIK tax on the fuel card?

Also is it still possible to claim for the 45/25p business mileage allowance minus the advisory HMRC rate?

Yes to first question, no to second as you won’t be allowed both (45/25 is for using your own car)

Technically I would be using my own car though as I would be funding it through the car allowance?

Guess that is something you would have to take up with your fleet department, as I don’t think they will give you a car allowance (which covers running costs) and pay you the 45p per mile. If they do grab it quick 😀 because for me last month if I claimed back at 14p rate (company set rate for business miles without fuel card in company car) I would of got £420 at the 45p rate £1350. Needless to say I am NOT allowed to claim for my mileage 🙁

Could always try to get them to give it to you as a tax free loan instead of a car allowance but I have no idea how the taxman views that dodge

I get a car allowance, which gets taxed. That allows me to buy a car of my own. I then claim 45p per mile.

As for the other OP question, I don’t know…

You’re best to ring the tax people and even they might not know but from the debacle that I’ve been through with my company car…

The rate you get paid in mileage when the company are giving you a car allowance will probably be less than the 45/25. Some companies still pay 45/25 but mine only pays half that as they are paying you for the car in the first place.

If you have a company fuel card and access to it for personal fuel that you pay back it’s very hard to justify to the tax people that you are not eligible to be taxed on that fuel.

For example they still taxed me for a company car that was sitting on my drive despite me not being insured to use it for personal use and having a supporting letter from my company to that affect. They justified it with ‘You could potentially use the vehicle for private gains as it is stored on your property’.

Thanks all. I have asked our HR dept for clarification, but apparently this is proving to be more complicated for them then I expected.

Until a couple of months ago I was getting an allowance in lieu of a company car and 40p a mile. The allowance was £3400 per year, which isn’t much after tax, but 6000 miles at 40p soon adds up.
The benefit of the 40p a mile claim is that it is tax free, and I claim back the 5 p difference from here at the year end.

The allowance only really covered depreciation, the mileage rates covered fixed costs such as services, insurance and tax.

It worked for me as my business miles were limited and I was running a 6 year Focus that was cheap to run.

I didn’t have a fuel card and claimed back my business miles only. The scenario you are suggesting is the same as the one I had with the exception that I paid for my own fuel then claimed back my business miles.

Take the allowance and the fuel card. Allowance will be taxed as normal, pay bik on the fuel card. At the end of the tax year claim MAR on the business miles.
Depending on how many business miles you do, you may end up doing very favourably from a tax perspective plus not paying much for personal fuel..

A fuel card can be an excellent perk.

Folk shouldn’t confuse ‘car allowance’ with actually using a car for business. I’ve worked many places where people got the allowance and never needed a car for business, in fact I’ve had staff without cars having the allowance as it was given on grade/seniority.

Car allowance here (£7k pa) and 19p a mile business mileage from company
Claim difference upto 45p a mile (26p) from HMRC every April
This is done by tax code adjustment rather than a cheque payment
My records show over last 4 years this has almost broke even on the tax claim paying for most of my private fuel
I’m running a cheap 5 yr old Hyundai that was paid off a year ago though and when I’m in the office I’m only 4 miles commute each day the car payment pays for services tyres brakes and rainy day money for repairs (bike bits)
If I had a fuel card the tax on it would make me worse off than current situation
For comparison I do about 9k business miles a year 5k private, get around 48mpg
Next year I’m opting back in to company car, but staying out of fuel card, this gets me a bigger posher more efficient car for only slightly more tax and added benifit that it drops me below the child benifit ‘most go full self assessment or loose it’ limit