“My employer has asked me to supply my own van for work, but he will buy the fuel. Am I entitled to claim mileage?” asks Scott Hews.
We knew exactly who to ask when this question dropped into our inbox at Business Vans: tax expert Colin Tourick.
Here’s what Colin had to say:
“This is a very unusual situation, something one might expect to find when a person is self-employed and providing their own vehicle, rather than employed.
“So the first question is, are you an employee or self-employed? The tax treatment will differ significantly depending on the answer. As you have said “my employer” I will assume you are an employee.
“When you say ‘he will buy the fuel’ I assume that’s only for driving business mileage and driving to and from work. If you drive more private mileage you’ll have to pay income tax and National Insurance (NI) on the benefit.
“Readers may be familiar with the arrangement whereby employees can receive up to 45p per mile for business mileage driven in their own car up to 10,000 business miles per annum, without paying income tax or NI. (The rate reduces to 25p per mile after 10,000 business miles.) The good news is that this also extends to private vans driven on company business.
“We then have to consider the fact that the company is paying for the fuel for each business mile.
“HMRC publishes a quarterly list of approved mileage rates; amounts in pence per mile that it allows an employer to pay an employee without any tax benefit or NI arising.
“The rate varies according to the type of fuel and the engine size of the vehicle. It would seem reasonable to use these rates as a deduction from the 45p/25p mentioned shown above, to reflect the fact that the employer is actually paying for the fuel, and therefore the employee is providing just the vehicle, rather than the vehicle and fuel.
“So the short answer to your question is that, so long as the employer is prepared to pay for the fuel used on your business mileage, I would have thought it reasonable for you to claim the 45/25p per mile, less the approved mileage rate. Anything above this will attract income tax and NI. Any shortfall should be put into your tax return as it will attract tax relief.
“However this is a most unusual situation, so I strongly advise that you have a discussion with your local HMRC office before embarking on this course of action. I’m willing to bet that the person you discuss this with won’t have come across this situation before. I certainly haven’t!”
Colin Tourick is a fleet consultant and a specialist in company car and company van tax. Colin has just published his latest Company Car and Van Tax book.
For more on business van mileage rates read this: Business mileage rates for a private van