Mileage tax relief for company cars

What are the HMRC rules on company cars and mileage refunds?

We at DSR Tax Claims know how complicated it can get when you are dealing with mileage claims and tax rebates and our mission is to make life much easier for our clients. So, let us share some of our expertise with you in our helpful guide to mileage refunds for company car users. Our handy online calculator can show you if you are due a tax rebate and if you are, call our friendly and professional team on 0330 122 9972 and let us sort that paperwork out for you.

What is a company car?

A company car is a car provided by your employer as a part of your job, to be used to do your job. However, this doesn’t mean that you can’t use it at any other time – company cars can also be used for private use (depending in the terms of your employment). Some employers even provide their company car employees with fuel to use for their own private use of the vehicle.

How are company cars taxed?

A company car is classed as a “benefit in kind” – this is a benefit of employment that you receive on top of your normal salary. These kinds of benefits are usually taxed at the same rate that you pay the rest of your tax. How much you are taxed depends on the type of company car you have and how much it is worth, as well as its fuel type and emissions and so on. If you get any kind of free or subsidised fuel then this is also classed as a benefit in kind, which you will also be taxed on. The way you will pay tax on these benefits is through your tax code – HMRC will amend your tax code to take account of the benefits in kind that you receive. If you don’t use the car for the whole tax year then you should only be taxed on the proportion of the year that you use the car – if you think you are paying too much tax this way, call our team of experts on 0330 122 9972 and we can sort that out for you.

What about work vans?

If you use your work van for personal use then that could be viewed as a benefit in kind by HMRC and you could be taxed on that use. If other people also have use of the van, you shouldn’t be paying the full amount of tax for using the van.

If you just use it to travel to work and back, and travel for your job while you are at work, you won’t get taxed on that use. Same with fuel use – if you aren’t using it for your own private use, you won’t get taxed on your fuel use.

What about pool cars?

Pool cars are shared company cars, used by a number of employees. As far as HMRC are concerned, these aren’t treated the same way as a company car and so you shouldn’t be taxed as a benefit in kind for using a pool car. To be counted as a pool car, you’re not usually allowed to keep the car at your home.

If you have a company car but it is sometimes shared with others, then this will still be classed as a benefit in kind but you shouldn’t have to pay the full amount of tax on the car because you’re not the only person using it.

Do approved mileage rates apply?

The HMRC mileage rates for private car usage don’t apply to company cars. The HMRC approved mileage allowance payments are designed to reimburse employees who use their own car for business purposes – they go some way to contribute to costs relating to wear and tear, road tax and so on. If you have a company car, your employer takes care of these costs on your behalf so you aren’t left out of pocket in that way.

HMRC set out Advisory Fuel Rates (AFR) four times per year to account for fuel usage in company cars. These are amended every quarter to take account of changes in fuel prices.

We at DSR Tax Claims hope that this guide has answered your questions about the taxation of your company car but if you think you are due a tax refund, give our team of experts a call on 0330 122 9972 and let us get you your maximum refund fast. It could be back in your bank account where it belongs in 21 days.

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