Company car tax - fuel scale charge

I think it would necessary to have separate clauses to govern the car benefit and fuel benefit.

Normally, it is more advantageous to reduce the fuel benefit first.

From what I recall, when I made a contribution towards the cost of a company car, the total contribution is deducted from the benefit in kind.

How far back does that recollection go? The rules changed recently.

That doesn't answer the question. There are two benefits in kind:

1) The car itself, charged at mumble percent of (list price less employee contribution to purchase price) per annum less usage contribution by employee. 2) The fuel scale charge, charged at the same mumble percent of £14400pa less employee's contribution to fuel purchase.

The problem is that (2) is reduced to zero if the employee reimburses the full cost of fuel for all private use. It has to be said this whole rule is utterly daft. Suppose mumble%. Then if the employer pays for all fuel, and the employee only does 1000 private mile per year. Then the fact that the employer is paying for all fuel is treated as a benefit worth £3600pa, which corresponds to a fuel cost of £3.60 a mile. Obviously if fuel in fact costs 9p a mile, it's cheaper for the employee to pay £90pa for fuel instead of £792 in income tax.

The whole set up is non-workable.

The frozen pea rep in his mondeo doing 45,000 business miles per year but 1,200 private miles pays the same as a director's wife with an MG sports car who does

Except that the trips would not be obligatory. Under this scheme the company car need not have any company use at all. That's the whole idea behind these -apparently deliberately punitive- taxes.

Where the company car is a genuine perk, hardly used for business at all, and does a lot of private mileage, it probably is quite "workable", but where private use is small, the genuine benefit is miniscule yet taxed as if it were huge.

In genuine mixed use cases, where both private and business mileages are substantial, and where there is not intended to be any benefit element at all (i.e. where the employee contributes realistic mileage payments in respect of private use), the deemed benefit treatment is not only fundamentally unjust, but encourages alternative solutions, such as giving the employee an interest-free loan to buy the car himself, and then paying him AMAP rates for business use. The tax on the IFL benefit can be a lot less than that on company car benefit.

I have moved most of my clients (with small business mileages) from company cars to "personal" cars over the past few years.

Would it not be even more advantageous to do so where *private* mileages are small?

So we agree the tax treatment of the frozen pea rep is unjust.

I've not seen any discussion in here about the announcement in the budget to apply a tax charge of £3,000 for private use of company vans in 3 years time. This is apparently to bring into taxation the big cab pick ups which have been growing in popularity because they don't attract VAT and have been taxed as vans for benefits in kind purposes.

Looks like the frozen pea delivery driver will be next for the treatment. Or have I got it wrong?

DG

The car was bought in 1994 and kept until 1998. I didn't get Fuel Benefit, but the amount I contributed to the cost of the car was divided by four and deducted from the Car benefit in Kind each year.

If the OP is paying 28p per mile for private use, that ought to extinguish both the Fuel benefit and some of the Car benefit.