Employees Who Use Their Own Vehicle For Business

My company has a small fleet of company cars available to our sales representives. One of the new employees is wanting to use his own car and claim mileage from the company. Do you have any advice on what records the company should be keeping for PAYE and National Insurance purposes?

1st November 2008

Your company is now more likely than ever to be subject to a full review of their compliance systems and procedures by HM Revenue & Customs.

You should ensure the employee who is claiming mileage keeps full mileage logs as the HMRC are likely to challenge all doubtful claims on the business mileage limit.

If you were to receive an inspection they would ask for evidence of business mileage and also ensure you keep separate figures for each car where there is a change during the year, or where more than one vehicle is available to a an employee.

With regard to the company car and fuel provided to the exisiting employees, there is a benefit in kind due on provision of these if they are used for private use other than home to work travel.

The fuel benefit is an 'all or nothing' benefit, so if the business pays for any private fuel and is not fully reimbursed by the director, the employees must accept the corresponding private fuel benefit and you must report it on a P11D.

It may be worth looking at the tax implications of this, and other ways of the employee owning the vehicles, as it may be more tax efficient for them to supply their own cars like the new employee.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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