Reducing fuel benefit for employees

noodles
noodles Registered Posts: 308
Help
Can someone please explain what the rules are re reducing fuel benefit. For 2009/10 I entered on an employees P11d that they had a company car and fuel paid etc and they were taxed quite accordingly. It has since been mentioned to me that if the person in question contributes an advisory fuel rate amount he will not have to pay the tax on fuel on P11d. I am now confused, can anyone clarify in detail how it work. I thought that regardless on how much you contribute personally to fuel you get taxed on all of it.

Comments

  • NeilH
    NeilH Registered Posts: 553
    Hi

    The P11d has a box in sexction F for "Amount paid by employee for private use of the car", which reduces the cash equivalent of the car benefit.

    Neil
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    NeilH wrote: »
    Hi

    The P11d has a box in sexction F for "Amount paid by employee for private use of the car", which reduces the cash equivalent of the car benefit.

    Neil

    Agreed, but not the fuel benefit. The only way to reduce the fuel benefit is for all the private fuel to be reimbursed by the employee.
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Agreed, but not the fuel benefit. The only way to reduce the fuel benefit is for all the private fuel to be reimbursed by the employee.

    Agree!

    Employee must pay for ALL private fuel personally to avoid the fuel benefit.
    Regards,

    Burg
  • A-Vic
    A-Vic Registered Posts: 6,970
    The only way to reduce a beneifit is if they had contributed to the cost of the car or the upkeep but agree all or nothing where fuel is concerned.
  • NeilH
    NeilH Registered Posts: 553
    Hi

    Not sure if I've misinterpreted, but are you saying any amount paid by the employee towards fuel/private can not be entered into section F anyway? In nscuffell's instance it is for fuel costs, but would this not count as contribution towards private use? Im not saying the £16,900 should be adjusted, but anything paid for by the employee in section F would have the an/same affect on the total cash equivalents.

    Neil
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    I thought that section was for capital contribution relating to the car but not the fuel, fuel costs cannot be reduced unless private fuel is completely reimbursed.

    I believe anything you put in there would reduce the benefit, but if all private costs have been reimbursed then there is no benefit.
  • NeilH
    NeilH Registered Posts: 553
    Hi

    The box I'm refering to is below the "Capital contributions..." box and reads "Amount paid by employee for private use of the car".

    I have to admit, it's not something I've ever needed to use as our employees do the mentioned "all or nothing" for reimbursment of private fuel.

    Neil
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    That box is more so for an employee making contributions towards the cost of the initial purchase of the vehicle. I've certainly never seen it done as the amount paid to is going to be less than the tax saved. Unlike the private fuel element which can differ depending on the amount of private fuel.
    Regards,

    Burg
  • NeilH
    NeilH Registered Posts: 553
    burg wrote: »
    That box is more so for an employee making contributions towards the cost of the initial purchase of the vehicle. I've certainly never seen it done as the amount paid to is going to be less than the tax saved. Unlike the private fuel element which can differ depending on the amount of private fuel.

    Not according to the HMRC CD calculator/working sheet, it refers to it as "Payments made in the year for private use of the car".

    Neil
  • A-Vic
    A-Vic Registered Posts: 6,970
    NeilH wrote: »
    Hi

    The box I'm refering to is below the "Capital contributions..." box and reads "Amount paid by employee for private use of the car".

    I have to admit, it's not something I've ever needed to use as our employees do the mentioned "all or nothing" for reimbursment of private fuel.

    Neil

    Capital contributions is as said before they can offset anything they paid towards the cost of the car or upkeep but the private use bit has me confused????
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    But that's not a capital contribution?????? Now I'm confused

    A capital contribution is against the initial vehicle cost and the only other cost that can be offset is ongoing usage costs (not fuel) which comes off the car (not fuel) benefit charged.
  • A-Vic
    A-Vic Registered Posts: 6,970
    am getting a headach lol
  • NeilH
    NeilH Registered Posts: 553
    ...the only other cost that can be offset is ongoing usage costs (not fuel) which comes off the car (not fuel) benefit charged.

    Isn't that what the box I mentioned is for...?

    Neil
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    From my understanding certainly not for fuel! Could it well be for payments towards private use for covering aspects such as finance, maintenance costs etc for the vehicle. There would be private aspects of these to cover.

    Other than that unsure but I wouldn't be offsetting payments made for private fuel, although who's to say the payments are particularly for fuel and not for other private elements if that works out better for all concerned (apart from HMRC!).
    Regards,

    Burg
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    Agree with Burg, amounts in here would cover private usage for anything except private fuel.

    That's what I've always been taught anyway.
  • NeilH
    NeilH Registered Posts: 553
    burg wrote: »
    ...although who's to say the payments are particularly for fuel and not for other private elements if that works out better for all concerned (apart from HMRC!).

    Though of that, but glad you said it - I'd would never be so "controversial" ;-)

    I'm guessing HMRC would take a view based on how the rebate was calculated. If its based (for example) on value/qty of fuel purchased, then it equals fuel...

    Neil
  • noodles
    noodles Registered Posts: 308
    Thank you for all the replies. I found from an old post how to calculate the private fuel element as this was what was confusing me. I had from my studies that a contribution was not acceptable re fuel so that is how I completed the P11d but it has since been highlighted that I should have advised them to repay back all the fuel personally used and then they would not occur the charge. My problem was, how to calculate the personal fuel element when no logs have been kept and all the fuel bills have been put in the company. Last year has been and gone but need to sort out for this year.
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    NeilH wrote: »
    Though of that, but glad you said it - I'd would never be so "controversial" ;-)

    I'm guessing HMRC would take a view based on how the rebate was calculated. If its based (for example) on value/qty of fuel purchased, then it equals fuel...

    Neil

    I'm certainly not condoning anything of the sort. But realistically if they are making payment to cover the private use they have covered then as a tax payer you have the right to put forward your best position in which case for both employee and employer that would be that if they do not cover all private fuel that it is for other private elements.

    HMRC may try to argue it the other way. With the right tactics I don't see why this could not be successfully defended?
    Regards,

    Burg
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    I would say that a consistent amount would point to contribution to running costs but varying amounts would indicate fuel - nothing official just my humble opinion.
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    I would say that a consistent amount would point to contribution to running costs but varying amounts would indicate fuel - nothing official just my humble opinion.

    Good point Annette, agree totally.
    Regards,

    Burg
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