And just to labour the point, HMRC are adopting an interesting approach when reviewing employers' records in relation to mileage payments to employees.
- a car is provided to an employee and that car attracts a benefit in kind charge; and
- any fuel is provided, whether for private use or not,
then a car fuel benefit charge is due. Currently, this is the percentage due on the car benefit applied to a fixed figure of £18,000.
The car fuel benefit charge can then be reduced to nil if it can be shown that either:
- the employee is required to make good all of the costs incurred in connection with the provision of fuel for the employee's private motoring and the employee does make it good; or
- fuel is made available only for business travel.
One mile of private fuel will equal a fuel scale charge for the whole year, so good records are vital to ensure that only the costs of business miles are being met or reimbursed by the employer.
In a recent case, HMRC showed that the records of the business were not good enough to prove that it was only the cost of business journeys that were being reimbursed to employees. Therefore, a charge was due in respect of each of the employees for several years, which the employer had to meet. Class 1A NIC was also due.
One of the problems here is that the definition of a business journey can be extremely complex. If you have concerns or questions regarding fuel costs or any other benefit in kind issues, please do get in touch.
Link: HMRC guidance