Published on Friday, 02 July 2010 00:00
The continual rise in fuel prices is increasing the burden on both individuals and businesses. In this section we look at the actions that you could take to reduce your costs, including driving advice, fuel prices, mileage rates and an opportunity to claim tax relief and recover VAT.
The AA has lots of ideas of how to reduce fuel consumption here: http://www.theaa.com/motoring_advice/fuels-and-environment/drive-smart.html . You can also register your details at www.petrolprices.com to find the cheapest fuel locally.
If you drive 15,000 miles per year in a vehicle that averages 40 miles per gallon then you will use over 1700 litres of fuel, if you can save 2.5p a litre then you will save £42.50. A word of caution, however, it will cost you £0.14 per mile to drive to the cheaper garage!
If you pay your staff or, indeed, yourself a mileage rate, there are a couple of things to consider: The HMRC allowable mileage rate for cars, for the first 10,000 miles, is 40p per mile and 25p per mile thereafter, and a flat rate of 24p per mile for 
motorbikes irrespective of the mileage. Details available here:
http://www.hmrc.gov.uk/manuals/senew/SE31240.htm
If you pay your staff less than 40p, don't forget to tell them that they may be able to claim tax relief on the difference between the rate you pay and the allowable rate, on their annual tax return. By way of an example, if your employee drives 7000 miles during a year, and you pay a mileage rate of 25p they can claim tax relief on £1050. (7000 x 15p = £1050)
If your business is registered for VAT you may also be able to claim back the VAT on a proportion of the mileage rate which you pay that is applicable to the cost of fuel. The rates that may be applied are detailed on HMRC website
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
For example if you have three employees each travelling 5000 miles per year in vehicles with petrol engines of between 1400 and 2000cc you could claim back over £350.00
The information contained in this newsletter/blog/website should not be construed as advice. There is no substitute for specific professional advice for your particular circumstances. To get advice specific to you please call Opus Accounting on (01635) 884270.
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