Employer Guide To Fuel Allowance
If you’re an employer considering offering staff a car/van fuel or mileage allowance, then this guide will take you through what’s involved, the reimbursement rates, plus the tax implications for both you and your employee.
As the rules differ depending on whether the vehicle is a car or a van, we’ve provided specific information on each vehicle type, to provide you with as much clarity as possible.
What is a fuel or mileage allowance?
A fuel or mileage allowance is where an employer pays for or reimburses an employee for their fuel costs or miles driven.
This allowance can be offered either alone or in conjunction with the benefit of a company car or van.
In practical terms, an allowance is usually given by either:
- Paying the employee a pence-per-mile rate for mileage driven
- Providing the employee with a fuel card to use when purchasing fuel
NB: The benefits and taxation rules are the same for both employees and any company director being given a fuel or mileage allowance, therefore where the term ‘employee’ is used, this includes reference to any company director being given a fuel/mileage allowance.
Claiming For Business Mileage Or Fuel: Cars and Vans
Employees can reclaim business mileage regardless of whether they personally own the vehicle, their employer is leasing it, or they are leasing it themselves (either as a personal or business lease contract).
For the purposes of both reclaiming fuel expenses and submitting vehicle tax returns, the employee must keep and submit to the employer a detailed vehicle log (using either a paper log or an app) as proof of mileage. Details of all journeys must be logged, (neither estimations nor retrospective recall is accepted) and this log must state the date, start and end locations, journey purpose and start and end odometer readings. If your employee incurs a lot of mileage, it may be easier to submit more frequently (weekly or monthly).
Employees can also claim for other business journey costs such as congestion charges, parking fees and tolls. However, if using the HMRC’s MAP rates to reclaim costs employees cannot also claim for running costs such as servicing, repairs, MOT and wear and tear, as these are all included as part of the MAP rates.
If you'd like to speak with our friendly team about business vehicle leasing, simply call 0118 920 5130 or email us at: enquiries@selectcarleasing.co.uk
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