How company car drivers can steer clear of a hefty tax bill.
Date of Issue: 15th May 2008
DRIVERS of company cars are being urged to pay for their own private fuel in a bid to thwart the taxman.
In recent months motorists have faced soaring rises in the price of both petrol and diesel coupled with rising charges for using cars with high carbon emissions.
But local accountants Bates Weston say company car users prepared to carefully log their journeys can save a small fortune simply by paying their employers for the fuel they use privately.
They explained: “If an employer pays for all fuel costs for a company car user, some of the cost must cover private journeys and the taxman will want his pound of flesh.
That could be a significant amount and, as an example, an employee driving a high CO2 output vehicle and paying tax at the higher rate could be paying over £2,000 in additional tax every year.”
They added: “The way to reduce this tax hit is to compensate your employer for the private petrol provided. If, in the above example, the driver’s private mileage is less than say 11,000 miles, they may be better off paying their employer for the private fuel rather than paying the tax on the fuel benefit.
The employee would simply need to log his or her private mileage for the tax year and multiply this by the appropriate, approved fuel rate per mile – for larger cars used in the tax year 2007-08 the average rate is just over 18p per mile.”
Returns of taxable benefits for the tax year 2007-08 will need to be completed by all employers before the 6 July 2008. If you want to reduce your tax charge for last year, talk to your employer now.
For more advice on any of the above issues you can contact Wayne Thomas by calling 01332 365855.
For further details, please contact:
Bridget Charlton, Marketing Manager
Email: bridgetc@batesweston.co.uk or telephone 01332 365855
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