Car allowance V fuel

[orangepeelsz]

Hi hoping someone with more wisdom can help!

I am starting a new role soon and it involves business travel, I am receiving a car allowance. But it just dawned on me I will need to budget for diesel costs this month and I'm not really sure approx what the costs might be as unsure of extent of travel until I'm actually doing the role.

Does car allowance generally cover your fuel costs or would you normally claim mileage separate? I didn't think to ask this during the interview process and I can't see a mention until he contract - it just mentions claiming expenses but isn't specific.

Could it be either way?

I think when I had car allowance I charged mileage at the lower rate .45p per mile.

Hiya. In my role I have a car allowance of £500pcm which covers my car lease costs and maintenance. We have fuel cards, and bill back our personal mileage on the government bill back rates. Always worth asking as it can make a big difference particularly where tax is concerned. I don't pay tax on mine because they don't pay for my personal mileage.

Car allowance is usually separate from fuel, especially for business travel. Normally it is 0.45p a mile to cover fuel and wear and tear to the car. Sometimes it is less for company cars or over a certain mileage a year.
You can also ask if they do a fuel card so you don't need to pay it upfront and claim but you would need to pay back personal fuel or be taxed on it.

I took the fuel card before as I drove loads of miles in my commute to work so the tax was cheaper than my fuel costs but since lockdown it was not worth it.

Your car allowance will be added to your salary and taxed Genuine business miles won't be taxable so you'll probably either claim them back or be given a fuel card. To and from the workplace is a personal journey and not business miles.

If they give you a car allowance, I'd expect them to reimburse fuel costs at the fuel only rate, as the allowance covers the cost of buying/leasing a car then insurance, servicing, MOT, tax etc. Different employers address this in different ways, eg fuel cards, expenses etc.

www.gov.uk/guidance/advisory-fuel-rates

If you're going to be running up expenses, it's really useful to use a credit card so you can manage your cashflow easier. So if you don't have one, maybe now's the time to apply?

Thanks so much that's really helpful from all of you.

I remember reading something in their policy about that Pre a certain date they did fuel cards and now only historic employees get them so I am presuming anyone new since that date must just claim the expenses - 45p mile which wouldn't be taxed.

I will need to find out how they work expenses in terms of payment and if it's monthly or weekly etc but I can ask all that in my first week.

Thanks everyone

If you get a car allowance you can usually claim mileage in addition, however it is NOT 45p per mile. The rate paid is as per the advisory fuel rate in the table linked above and you do not pay tax, NI etc. on it. If your employer pays more than the government advisory rates the amount over the advisory rate it subject to tax, etc.

The 45p is the maximum “tax free” amount that can be paid to someone who does not receive a car allowance or a company car. Though some employers do choose to pay less.

@FiFiTrixa ahh ok makes total sense thanks so much

The advisory limit is 45p a mile. It’s the 11p a mile in the link above for a company car

I used to get £6,500 car allowance each year taxed as PAYE and claim the 45p milage allowance for my milage in my own car tax free

Oh and I did have to wait ages for the expense claims to be approved and end up in my pay!

Not so bad when you’re in rolling months but can be difficult when first starting to claim them

@OnTheBoardwalk great thanks, the car allowance I will get is also £6600 - I will make sure I'm on top go receipts and expense claims so I don't end up waiting any longer than necessary. I think a separate credit card is a great idea too.