I have a client who gets a company car allowance in their monthly salary. The company pays for all the fuel via a fuel card and then the employee calculates all miles travelled (business and private) on a spreadsheet and the employer then takes a deduction from the salary at the end of the month for private mileage (based on 8-9p per mile). I'm just getting confused as to whether there is any mileage claim that can be made, as it could be said that the company is paying 8-9p per mile, so there is a claim for the remaining 34-35p per mile.
Arthur Weller replies:
Usually, a monthly company car allowance is subject to normal income tax. The deduction for private mileage will reduce the taxable figure. See the government’s guidance: tinyurl.com/yvftk74b, which lists the rates at which employees need to repay the cost of fuel used for private travel. The general rule is that to escape the fuel charge, an employee must reimburse the whole cost of private fuel to the employer. The 45p per mile tax-free approved mileage allowance for business journeys includes the cost of petrol as per the government’s expenses for business journeys.