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Reducing Your Fuel Tax Bill
By keeping proper records of your business journeys and fuel consumption, you could save upto £3000 on your annual tax bill, depending on the CO2 emmissions of the vehicle. This is because all company car drivers, where the company pays for fuel used for private journeys, may be liable to pay tax and NI costs of over £1 for each mile. It is easy to see how this could add significantly to your annual tax bill.
But, there are ways to avoid such a bill landing on your doormat. In reality it is almost impossible for a company car driver not to have to make private journeys in a company vehicle, to and from work for example.
In order to minimise the tax and NI bill, the company must show within its policies that it ‘requires’ the company car driver to repay the cost of the fuel used for private journeys, and the evidence of such repayments should be clear within the accounts.
By ‘repaying’ the cost of the fuel at the reimbursement rate set by HMRC, the business can escape the tax and NI bill, but all repayments must be made within 30 days. All drivers are also required to submit a record of private mileage to show the business is monitoring its policy seriously.
If you need help or advice about company cars or fuel taxation speak to the tax team today on 0845 680 7800.
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