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Moneytalk: pay my own?

14/ 4/2008

Q I'VE received my tax coding for this year (2008-09) and notice that the car fuel charge has increased again. Would I be better off paying my own fuel costs in future?



ATHE `multiplier' for car fuel benefit has increased from £14,400 to £16,900 for 2008-09, which would explain the change in your tax coding.

There will be many cases where drivers would find it cheaper to pay for all fuel than pay the tax charge, and, so far as your employer is concerned, the benefits would be saving the cost of the fuel and saving Class 1A NIC on the fuel charge - the only downside being that the employer will pay you for business fuel on a mileage basis. Your employer would effectively avoid the cost of paying for your private fuel, and you would save the income tax on the fuel benefit charge.

Although you would be paying for the fuel, you would receive non-reimbursement for your business mileage. You therefore need to work out for yourself your total mix of business and private miles and also factor in the fuel efficiency and fuel type of your car, to see how beneficial such a change could be. If you have a professional advisor, he or she could do this for you.