An accountancy firm is warning that businesses are wasting money due to lack of understanding around HM Revenue and Customs (HMRC) company car tax regulations.
A recent YouGov has shown that 70% of company owners don’t have a full comprehension of the tax implications that surround mileage claims with their fleet and company cars.
Commenting on the survey results, Ian Brown, director at accountancy firm Bulley Davey, said: “As an employer, if you provide company cars and fuel for your employees’ private use, you need to work out the taxable value so you can report this to HMRC.
“The survey found 49% of company owners provide their employees with a fuel benefit despite not fully understanding how the tax is calculated, for instance employees travelling anything less than what can be considered as high private mileage will be better off giving up the benefit and paying for their own private fuel. In addition, one half don’t know how much additional tax employees pay to have the fuel benefit.
He added: “Once the benefit is done away with, the company can also save considerable money through national insurance reductions, elimination of private fuel costs and the road fuel scale charge.”
The survey also showed 88% of employees are not aware that paying for their own private mileage is likely to be cheaper. Over 46% of employers also see the mileage claim process as an inconvenience.
Brown continued: “It is important company owners remain compliant with the regulations as, should HMRC deem that the law has not been adhered to, a £3,000 fine for not keeping correct accounting records can be imposed. However, it is important to know the requirement and need for private fuel benefit to ensure no money is being lost.”