FAQ's: Company van on benefit-in-kind (BIK)

posted by -
HMRC regulations are never black and white. So if you have a company van on benefit-in-kind (BIK), inevitably some questions are unclear…

What is the correct way to reimburse fuel costs? How much does each private mile ‘cost’? How should the mileage be monitored? This article will explore these frequently asked questions.

Where the employee is required to make good the cost of all fuel provided for private use, (Condition A of EIM22920) the business must ensure suitable measures are in place to administer either one, or combination of the ways described below:

Payment: Paying the employer a sum of money either directly or by deduction from his or her net salary or wages.

Reinstatement: Replacing fuel provided by the employer (or another person on behalf of the employer) by a corresponding amount of fuel purchased from his or her own pocket.

So now we understand the ‘how’, but what about the ‘how much’?

There are no figures from HMRC depicting an advisory fuel rate (AFR) ‘pence per mile’ equivalent for vans. However, they advise that the business should implement an agreed value founded on cost per mile, per vehicle. Additionally, to differentiate business and private mileage, the business must keep a detailed mileage log; much like one would when using a company car on a mileage claim system.

In summary, the simplest way to think of a company van on benefit-in-kind is to manage it like a company car, except the business decides on the AFR.

For free advice on all company vehicle tax queries, ABAX is here to help. #KnowTheRules