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EMPLOYERS – You are paying for drivers private fuel when you shouldn’t.
DRIVERS – Your fuel BIK tax is more than what your fuel spend would be.
If your business pays for your employees private fuel as a perk then it is possible that both you and your driver are out of pocket – it all depends on how much personal driving they do
Benefit in kind (BIK) tax for personal mileage works as follows. There is a notional figure of £22600 as of April 18 * co2 based benefit % charge * your rate of tax.
So if we use the example of a vehicle (21%) and a 20% taxpayer the actual cost to the driver for the benefit of having their private fuel paid for by the business would be £79.10pm.
Now based on the advisory fuel rates this same driver would need to drive a huge 820 miles a month to get any financial benefit from this intended perk.
FYI – My personal mileage last month was 520, and I drive quite a bit. In addition to the driver paying more in tax than they would in fuel the business is also funding the fuel as well meaning that in total between the two parties there could be around £150 per month being spent on just a few private miles.
The cleanest way to solve this problem is to allow your drivers to continue to have their private fuel funded by the company but make a salary deduction each month for the actual amount of private miles they have driven – i.e. let them pay for their own fuel.
Of course you will need to keep accurate and compliant journey records for this. Consider some form of GPS or telematics device to help you administer this.
The result – your company saves the fuel cost and your driver on BIK. If you want some free advice on how to make this work for you personally or for your fleet please feel free to drop me a line.
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