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If an employee has a car allowance and pence per mile, am I correct in thinking that this scenario is acceptable:
The employee can use company credit card to buy fuel during the month. ✔️
At end of month the amount they are owed in mileage is calculated and is deducted from their total 'fuel bill' and they either pay the difference by payroll or bank transfer. ✔️
Now this is the bit I'm unsure of..
Can the employer claim VAT back on the portion of the business use?
Example, employee does 1,000 miles total, 600 mile business and 400 miles private. Business can legitimately claim 60% of the VAT from fuel reciepts??
This allows the employee to not worry about having to fund the fuel for their journeys during the month without may BIK issues as the private is paid back within tax year.
Hope that makes sense!
Have a read:
https://www.gov.uk/guidance/advisory-fuel-rates
Believe the company will be able to reclaim the VAT (20%) but not the fuel duty, but it depends on what the VAT recovery rates is for your company/industry. Sometimes you can’t recover all of it.
HMRC set the pence per mile amounts you can claim if you’re using a company car.
we get 0.15ppm and claim the difference back at end of tax year.
The company doesn't currently claim the VAT back so thinking that may be an incentive for them to allow use of the company credit card for all fuel then employee re-imburse via payroll.
A lot of the reps do huge mileages and they're out of pocket a lot.
we get 0.15ppm and claim the difference back at end of tax year.
It's not "the difference", it's the tax on the difference.
I work for a similar tight-arsed company - and it's the first company I've worked for (in +30 years) that has not paid the maximum allowed (currently 45ppm). Takes the pi55.