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bigduckontax, Accountant
Category: Tax
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I work company and have company supplied car. We have to pay

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I work for a company and have company supplied car. We have to pay for all private mileage use at the agreed HMRC rate for my size engine of 8p per mile, which all makes sense, as it covers cost for fuel for private use and reduces my tax bill.
My question is, the company is putting VAT on top of this 8p per mile charge and billing us for it. So I am in effect paying £0.096 per mile, is this correct ?

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Unfortunately it is; here is the Gov UK web site advice on this subject:

'If you make items owned by your business available for temporary private use, either by using them personally or by lending them to someone else, then you’re making a VAT taxable supply of services.'

Thus the imposition of the tax on the private usage of the car is both right and proper.

I am so sorry to have to rain on your parade.

Customer: replied 1 year ago.
But if the company is also claiming VAT on the Diesel purchased for the car, is this still correct ?
We purchase our diesel with a company credit card, hand in all receipts and list of all company miles and total miles for the week. We are then charged the difference between total miles and company use miles. All that is OK.
but if company is claiming VAT on fuel purchased and then charging us VAT on private miles, is this still correct ?

Yes indeed, all is quite correct.

The company is selling you the usage of its vehicles for private purposes and is correctly charging VAT on these supplies. Equally it is perfectly entitled to reclaim any VAT suffered during its business transactions.

bigduckontax and other Tax Specialists are ready to help you

Thank you for your support.