The Fizz! Blog

HMRC's fuel-only mileage rates updated

Taxman-approved fuel-only mileage rates changed on the 1st December.  They're almost all down a bit, since fuel's got a bit cheaper lately.

These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business (plus 5p a mile if they've got a colleague with them!).  That hasn't changed, it remains 45p.  You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.

The new list of rates is here:

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-september-2015

If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

You almost certainly don't want your company to pay for your private fuel

When an employee or director has the use of a company car, they pay tax in return for the privilege.  If the company also pays for all the fuel they use for their private motoring, they pay some more tax in return for that privilege too.

There was a time where it might be desirable to have your private fuel paid for, if you used the car for lots of personal mileage.  These days, it's very unlikely - the tax that most people would pay would far outweigh the benefit of having their private fuel paid for.

The tax cost is based on a standard figure (£22,100 at present), times a multiplier based upon the car's emissions figure, times the marginal tax rate that the recipient is paying.  A fairly normal car could have a multiplier of say 29%.  That means that a higher rate taxpayer would pay tax of £22,100 x 29% x 40%, which is £2,564 - over £200 a month.  For the majority of drivers, that's more than the private fuel used would cost.

If you really hate record-keeping, then by all means have the company pay for everything and take the tax hit.  For most people, though, it's going to better to pay for all fuel themselves, and claim the business part from their company.

www.fizzhq.com

HMRC's fuel-only mileage rates updated

Taxman-approved fuel-only mileage rates changed on the 1st December.  They're almost all down a bit, since fuel's got a bit cheaper (well, less expensive) of late.

These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 45p.  You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.

The new list of rates is here:

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-september-2015

If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

HMRC's fuel-only mileage rates change at the weekend

Taxman-approved fuel-only mileage rates change on the 1sr December.  They're almost all down a bit.  Has fuel got cheaper of late?  I hadn't noticed.  Anyway, these are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 45p.

You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.  As fuel costs have increased so sharply, the approved rates - the part of the 45p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more.  The new list of rates is here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

How much does your car really cost you?

I'm often gently mocked in the office for keeping a close eye on my personal finances - I monitor them using the full-blown accounts package QuickBooks.  It's a habit I started when I was a trainee with next to no money, permanently in danger of a £20 unauthorised overdraft fee, and even if I'm pushing the limit a bit less now I still find it enormously helpful to be able to see how much I'm spending and saving, for the sake of one or two minutes' work a day.  Amongst other things, it means I'm really clear on the cost of motoring to me.

For many people, their car is the second biggest cost in their life, after their home.  For some people, especially those who have an oldish smallish mortgage, it's actually the biggest.  But most people don't have any real idea of how much it actually costs them over its life.  Many people have some idea on the cost of fuel, but how about:

• Depreciation/leasing costs
• Servicing
• Road Tax
• Insurance

It's not unusual for those costs to add up to more than the cost of fuel - it's fairly typical to find that, when you look at it, fuel is costing 20p a mile in a typical car but those other costs add up to 25p plus - even for a car that's not brand-new.

It's a bit of a frustration when people say they can't afford to save or make pension contributions, when you know full well that they could, but have made a decision to allocate the resources to the shiny £499 a month piece of metal outside.  We're not knocking the choice to allocate resources to cars rather than anything else, it's a personal decision - but we do think it's a decision that's better made on an informed basis.

If you find that your car is costing you 65p a mile all-in, and you still think the practical and mental benefits to you are worth it and outweigh those of using the money in another way, that's completely cool.  But there are some people who just haven't looked at it with a clear enough head to realise the magnitude of the choice they're making.  Some of them just might make a different decision if they saw the truth in black and white.

It's not difficult to do calculations to work out the rough cost per mile of your car.  I've a really simple spreadsheet for doing it - if you're a client and would like a copy, drop me an email.  You might be surprised by the result!

www.fizzhq.com

Considering buying a zero or low emission company car? Think ahead

Usually, company cars aren't a very tax-efficient way to go if you run your own company, as the tax you pay on the privilege personally will generally outweigh the tax your company saves.  For the last few years, an exception has been on zero-emission (i.e. electric) and low-emission vehicles - if you have a company car that qualifies under the rules, you don't have to pay any tax personally at all, making them a very attractive prospect.

However, that incentive is scheduled to finish in April 2015 - from that point, tax is going to be payable by the user of the car, as things stand - at a lower level than on a "normal" small car, but not much lower.  It doesn't make a difference immediately, but if you're thinking of buying such a vehicle for use as a company car, and you're planning to keep it for more than two and a half years, you should definitely be aware of the proposed change and think about whether a zero/low-emission car will be quite as attractive in a couple of years as it is now.

www.fizzhq.com

Pool cars kept at home - a glimmer of hope?

If, as an employee or company director, you have access to a car for private use, then you have to pay tax as a result.  That's the case even if you don't use the car privately - the fact that you could have used it privately if you'd wanted to is enough.

It is possible for an employer to have a pool car - a car that's used for business, but isn't available for anyone's private use, meaning no individual has to pay tax on it.  However, for a small business, demonstrating to HMRC that you've made the car unavailable for private use is difficult, almost to the point of impossibility.  In particular, if the business is run from home, the car will probably sit outside the house, and that's enough for HMRC to be convinced it's available for private use, whatever procedures and policies you draw up.  Many directors have tried to avoid tax on a pool car kept at their house, and many have failed.

However, a recent tax tribunal did find in favour of the taxpayer in such a case.  A car was kept outside the house of the company secretary, who worked for the business full time.  The house was also his main place of work.  A key difference from most such cases, though, was that other employees used the car as well, not just the company secretary.  The home was clearly the most sensible place to keep the car under the circumstances, and the car wasn't kept there just to make it convenient for private use - if the secretary had an office elsewhere, then that's where the car would have been.

So, it is possible to successfully demonstrate that a company car kept at home is a pool car.  But it's likely that the other employees made the difference - one-man/woman-band limited companies are still likely to find the argument tough to win.

www.fizzhq.com

Fuel-only mileage rates change tomorrow

Taxman-approved fuel-only mileage rates change tomorrow (in fact, the diesel ones are changing - the petrol ones haven't changed).  These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 45p.

You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.  As fuel costs have increased so sharply, the approved rates - the part of the 45p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more.  The new list of rates is here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

Fuel-only mileage rates change

Taxman-approved fuel-only mileage rates changed today.  These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 45p.

You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.  As fuel costs have increased so sharply, the approved rates - the part of the 45p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more.  The new list of rates is here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

The new rates are to be applied from 1 September.  If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

Fuel-only mileage rates change

Taxman-approved fuel-only mileage rates changed on 1 December.  These are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 40p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 40p.

You can’t reclaim VAT on all of the 40p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.  As fuel costs have increased so sharply, the approved rates - the part of the 40p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more.  The new list of rates is here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

The new rates are to be applied from 1 December.  If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com