Car Fuel Benefit is an issue that affects all
employees and directors who have their
private fuel costs paid for by their employer.
In the past, the taxable benefit has been
calculated by applying the relevant %
(based on Co2 emissions and fuel type) to
a fixed amount of £14,400.00.
However, the 2007 budget increased the
fixed amount to £16,900.00 with effect
from 06 April 2008.
For example, if your car is a high emission
diesel car during 2008/2009, there could be
a fuel benefit charge of up to a maximum
of £5,915. For a higher rate taxpayer this
equates to additional income tax payable of
£2,366, simply for having some or all of your
private fuel costs paid for by your employer.
For those employees who pay for all their
fuel including that in connection with
business trips, you are entitled to claim
a minimum of 11 pence per mile and a
maximum of 19 pence per mile (depending
on the engine size of your vehicle and
whether it is petrol or diesel powered) in
respect of business mileage without any
tax implications thereon.
It is therefore recommended that you
consider all of the factors before deciding
whether to accept a benefit in kind on
private fuel or whether it would be more
advantageous to be reimbursed on a
mileage basis.
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