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These rates apply if you are provided with a company car by your
employer and you;
claim a mileage allowance from your employer solely for the
cost of fuel used on business journeys, or;
repay your employer for fuel used on private travel –
including that between your home and normal workplace.
If you use the approved rates, you have certainty that you are
claiming no more than the true cost of fuel used on business
journeys and so will not be taxed on a 'fuel benefit'.
The rates last changed on 1 December 2014 and have now been
amended with effect from 1 March 2015. Overall, all rates
have reduced reflecting the recent drop in fuel prices.
If you have been either claiming more for business mileage, or
repaying less for private mileage, than the HMRC official rates,
HMRC's view is that fuel for private travel is provided by the
employer. The car driver is therefore taxed on the fuel benefit
scale charge, unless the car user meets the cost of all fuel used
privately. In the past when rates have changed, HMRC have said they
would not pursue this line but no such reassurance has been given
for some time. There is, therefore, a risk that company car drivers
who might have paid a few pence less for their private travel than
the official rate will be taxed on the full fuel scale benefit,
which could add up to £2,500 to their annual tax bill.
Employers would also be hit with extra Employer National Insurance
on the fuel benefit.
The new rates effective from 1 March 2015 are as follows
(previous rates, if different, shown in brackets);
Engine size
Petrol
Diesel
LPG
Petrol 1400cc or less
11p (13p)
-
8p (9p)
Diesel 1600cc or less
-
9p (11p)
-
Petrol 1401 to 2000cc
13p (16p)
-
10p (11p)
Diesel 1601 to 2000cc
-
11p (13p)
-
over 2000cc
20p (23p)
14p (16p)
14p (16p)
If you pay your employer for petrol used on private travel, you
should now reduce the amount you repay your employer. Equally,
those claiming business mileage from their employers should
immediately reduce the amount claimed.
Where employees are paid mileage allowances rather than being
reimbursed the cost of their fuel, the business can either account
for a scale charge or claim input VAT on fuel for the actual
business mileage, depending on whether the mileage allowances
covers all mileage or just business mileage. Note that the new
scale charge regime is based on CO2 emissions. Subject to a
scale charge being accounted for where required, the business can
reclaim input VAT out of the fuel element of the mileage allowance.
The fuel rates are the same as in the table above and are treated
as inclusive of VAT for reclaiming input VAT.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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