Company car fuel benefits
If you use a company car you needs to check if
it is worthwhile for the company to pay for the fuel or whether
it would be more tax efficient to pay for the fuel yourself and
claim a mileage allowance.
For example, a company car with a CO2 factor
of 183 would give you a fuel benefit for the year to 5th April
2006 of £3,312. The tax cost and equivalent private mileage
is as follows:-
| Your highest tax rate |
22% |
40% |
| Tax tax cost of the benefit |
£729 |
£1,325 |
| Equivalent private mileage |
5,593 |
10,166 |
If your annual private mileage is under these
mileages for your tax rate, then it is cheaper to pay for the
fuel yourself and claim a mileage allowance for the business mileage
that you have driven.
The tax free mileage allowance for a car in respect
of the year to 5th April 2006 is as follows:
| First 10,000 miles |
40p per mile |
| Over 10,000 miles |
25p per mile |
If you would like to know more about these tax
savings contact David
Cane on 020 8390 6878.
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