Tax free expenses for car allowance help

[Trapsteruk]

Hi i have just been offered a job with, my current job pays £450 per month car allownace with a fuel card but i pay for my own private fuel, i then claim any tax back on the fuel that is not covered by what i have spent on the fuel car ie adding up 45p 10k and 25p for the rest, been doing this for years.

Now the new job is offering £650 per month as a tax free expense to run a car but this includes me paying for all the fuel, does anyone know if you can claim anything for fuel from the tax man, i have looked and looked and can not see anyone who does it this way ?

They tell me they do it this way with tax free expenses as it works out better for the employee and the employer.
I just want to know if i can claim any tax back as i do now?

[Captain_Morgan]

Trapsteruk said:

Hi i have just been offered a job with, my current job pays £450 per month car allownace with a fuel card but i pay for my own private fuel, i then claim any tax back on the fuel that is not covered by what i have spent on the fuel car ie adding up 45p 10k and 25p for the rest, been doing this for years.

Now the new job is offering £650 per month as a tax free expense to run a car but this includes me paying for all the fuel, does anyone know if you can claim anything for fuel from the tax man, i have looked and looked and can not see anyone who does it this way ?

They tell me they do it this way with tax free expenses as it works out better for the employee and the employer.
I just want to know if i can claim any tax back as i do now?

Hola & welcome to the forum.

[Trapsteruk]

Thank you for having me :-)

[Muzzer79]

Trapsteruk said:

Hi i have just been offered a job with, my current job pays £450 per month car allownace with a fuel card but i pay for my own private fuel, i then claim any tax back on the fuel that is not covered by what i have spent on the fuel car ie adding up 45p 10k and 25p for the rest, been doing this for years.

Now the new job is offering £650 per month as a tax free expense to run a car but this includes me paying for all the fuel, does anyone know if you can claim anything for fuel from the tax man, i have looked and looked and can not see anyone who does it this way ?

They tell me they do it this way with tax free expenses as it works out better for the employee and the employer.
I just want to know if i can claim any tax back as i do now?

Are you sure your £650 is for all fuel?

I can't see how an employer can know how much fuel you're going to be using for company miles to pre-pay it.

Also, how are they structuring giving it to you 'tax free'?

[Countdown]

Trapsteruk said:

Hi i have just been offered a job with, my current job pays £450 per month car allownace with a fuel card but i pay for my own private fuel, i then claim any tax back on the fuel that is not covered by what i have spent on the fuel car ie adding up 45p 10k and 25p for the rest, been doing this for years.

Now the new job is offering £650 per month as a tax free expense to run a car but this includes me paying for all the fuel, does anyone know if you can claim anything for fuel from the tax man, i have looked and looked and can not see anyone who does it this way ?

They tell me they do it this way with tax free expenses as it works out better for the employee and the employer.
I just want to know if i can claim any tax back as i do now?

Just to clarify - they're giving you £650pcm tax free ?

You can claim the tax back on 45ppm/25ppm for any mileage your Employer doesn't reimburse.

[MustangGT]

Muzzer79 said:

Are you sure your £650 is for all fuel?

I can't see how an employer can know how much fuel you're going to be using for company miles to pre-pay it.

Also, how are they structuring giving it to you 'tax free'?

Exactly. Car allowances are subject to tax, fuel for private use is also subject to tax. Without a proper record of mileage for business use they cannot possibly justify £650 month , tax free, to HMRC.

I suggest you ask for more information around this, more clarity is required.

[Trapsteruk]

just to clarify the £650 per month is to cover me supplying a car and fuel, i can not claim and fuel costs back, so not 45p and 25p from the company, the £650 is what you get, as far as i can tell its just down as expenses, so hence tax free, but with expenses you usually have to put in proof of what you have spent, so their is no breakdown of what the £650 is for, apart from running a car, i spoke to a accountant who was surprised they can do this but said. They may have a deal with HMRC in place that allows this but she could not be sure.
She said if it is not broken down into how much is for the car or how much is fuel then i would have to say it’s all for fuel.
The company have said they expect me to do around 15000 per year, so 0.45 10000 miles £4500 and 0.25 5000 £1250 total 5750 but they would be paying £7800 per year so i could not claim back any tax from HMRC and i can not claim any fuel from the company as the £650 includes all fuel, so if my yearly mileage went up, i would be more out of pocket ? I need to find out from this company what they put the £650 expenses down as ? It seems very odd to me, i have been getting a car allowance for over 18 years never seen it done like this ? Almost seems illegal? But. It’s not a small company around 180 people working their.

[Muzzer79]

This really isn't making sense

Trapsteruk said:

just to clarify the £650 per month is to cover me supplying a car and fuel, i can not claim and fuel costs back, so not 45p and 25p from the company, the £650 is what you get, as far as i can tell its just down as expenses, so hence tax free, but with expenses you usually have to put in proof of what you have spent, so their is no breakdown of what the £650 is for, apart from running a car

Are you absolutely sure this isn't a regular car allowance, whereby:

You are paid £650 a month, which is taxable as normal salary is
This £650 covers the cost of supplying and maintaining a car.
You then claim mileage expenses on top for business miles, at a rate determined by the company.

You can them claim the tax difference back between the business mileage rate you are paid and the 45p/25p allowance from HMRC


Any other situation is highly unusual.. It can't be paid as expenses as tax free because there's no expense to declare.

[Trapsteruk]

100% it is just done as a £650 per month tax free expense, i have asked do i claim the fuel back and they said no it all comes out of the £650, they are calling it a car allowance, but it seems they are just giving you £650 a month expenses and although they know its to run a car and to pay for fuel, maybe they do not declare that its for this to HMRC ? I have emailed and asked for me clarification from them, but i do not want to be taking a job and then a few years down the line i get hauled in by HMRC fro not paying tax and Ni on the £650 per month, its a great way to do it but why do all oompah say just do this ? It just does not sound right to me.

[Sheepshanks]

What's your typical monthly business mileage going to be?

[Trapsteruk]

Around 15000 miles

[Muzzer79]

Trapsteruk said:

100% it is just done as a £650 per month tax free expense, i have asked do i claim the fuel back and they said no it all comes out of the £650, they are calling it a car allowance, but it seems they are just giving you £650 a month expenses and although they know its to run a car and to pay for fuel, maybe they do not declare that its for this to HMRC ? I have emailed and asked for me clarification from them, but i do not want to be taking a job and then a few years down the line i get hauled in by HMRC fro not paying tax and Ni on the £650 per month, its a great way to do it but why do all oompah say just do this ? It just does not sound right to me.

That is highly, highly odd.

Wait until you get your written clarification from them, then post it up on here (anonymised)

[dibblecorse]

I have never seen a car allowance managed this way and have negotiated contracts with over 200 UK companies in the past for new employees, all smells very very fishy to place a blanket £650 in monthly expenses through payroll.

I'd want to see the agreement they have, if any, with HMRC as you are wearing all the risk on this one.

[Countdown]

Trapsteruk said:

100% it is just done as a £650 per month tax free expense, i have asked do i claim the fuel back and they said no it all comes out of the £650, they are calling it a car allowance, but it seems they are just giving you £650 a month expenses and although they know its to run a car and to pay for fuel, maybe they do not declare that its for this to HMRC ? I have emailed and asked for me clarification from them, but i do not want to be taking a job and then a few years down the line i get hauled in by HMRC fro not paying tax and Ni on the £650 per month, its a great way to do it but why do all oompah say just do this ? It just does not sound right to me.

if it's being paid via payroll it's being declared to HMRC every month automatically..

In brief- payments from your employer to you should be taxed unless they are the reimbursement of expenses. And if they are expenses then the Employer needs to prove that you incurred the expenses (via the submission of receipts or mileage logs).

If HMRC DO pick up on it then initially they will chase the Employer, but if the employer closes down they will come after you.

[StevieBee]

Trapsteruk said:

100% it is just done as a £650 per month tax free expense.

Be careful. What they are offering is illegal. You will be liable.

They are either:

Paying you an extra £650 a month on top of your agreed salary on which you are liable for income tax and NI, the balance of which you are expected to use to fund the running of a car primarily for the purpose of business.

Or

They are paying you £650 for the explicit purpose of running of a car primarily for the purpose of business on which you are liable for BiK tax.

There exists no mechanism by which you are legally able to be paid that money without incurring tax liability unless the vehicle is a Van or other Commercial Vehicle.

I suspect that what they have (mis)explained to you is the latter of these two and that the £650 is the inclusive amount available to you whereby you can either finance a fully loaded M3 or whatever, maxing out the allowance.... or buy a 10-year old Dacia and keep anything that's left.

Either way, there is no tax free scenario.

[Sheepshanks]

Trapsteruk said:

Around 15000 miles

Hmmm.... I was wondering if it was higher - 23,200 miles per year would average out at £650/mth using the 45p/25p business mileage rates.


As others, I'm dubious about it and suspect there's some misunderstanding. HMRC isn't even keen on round sum allowances for meals, never mind cars.

[Trapsteruk]

Good morning Alan

I hope you are doing well.

We are on the recruitment path again for the position of field service engineer in the southwest. The salary would be xx with a car allowance of £650 tax free per month on top of this or you could take a company car with fuel card. Company clothing, mobile, tools and iPhone are included in the package.

Please let me know if this would be of interest to you and we can set up a call.

Kind Regards

[Trapsteruk]

That is the email i had from them to see if i was interested in the job, i have had a phone call with them also, i also had a interview with them in January and they said the same thing but i got to the last two people but did not get the job, they said could they keep my details on file and if another position came up they would let me know, so they did with that email and offer and as you can see tax free ? The finance director has been asked to clarify to me how this can work and what have they told HMRC, so hope to get a email from them in the next day or so.

[Deesee]

Trapsteruk said:

Good morning Alan

I hope you are doing well.

We are on the recruitment path again for the position of field service engineer in the southwest. The salary would be xx with a car allowance of £650 tax free per month on top of this or you could take a company car with fuel card. Company clothing, mobile, tools and iPhone are included in the package.

Please let me know if this would be of interest to you and we can set up a call.

Kind Regards

If they are going to pay the BIK on 20/40% tax perhaps why not.. However Id take the fully expensed car and fuel card all day long.

[StevieBee]

Trapsteruk said:

Good morning Alan

I hope you are doing well.

We are on the recruitment path again for the position of field service engineer in the southwest. The salary would be xx with a car allowance of £650 tax free per month on top of this or you could take a company car with fuel card. Company clothing, mobile, tools and iPhone are included in the package.

Please let me know if this would be of interest to you and we can set up a call.

Kind Regards

That is just plain wrong. Such is the wrongness, I half expect this to be put down to a typo!