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Before you make the decision of using a company car or your own car for business, it is important to know all the facts and what you will pay when it comes to reclaiming business miles. These are the 3 most common situation when becomes to that matter:
1. You use the company car and the company pays for your fuel
If your employer pays for all your fuel, you’ll be required to pay fuel benefit tax in addition to the Benefits in Kind tax for the car. You can work out the BIK here.
2. You use the company car and you pay for your own fuel
If you pay for your own fuel and need to reclaim those miles traveled for business, Advisory Fuel Rates (AFRs) set by HMRC will apply. The rates are reviewed four times a year. To view the latest AFRs rates, click here.
You must be recording the business miles to reclaim them.
3. You use your own car for business and you pay for your fuel
If you use your own car and pay for your fuel and need to reclaim those miles travelled for business, the Approved Mileage Rates set by HMRC will apply. To view the latest AMRs rates, click here.
In this situation, you must ensure the following:
– your insurance includes Business Use;
– the car is up-to-date with its MOT and servicing.
These are higher than the AFRs rates because in addition to the fuel costs, depreciation, insurance costs and road tax are all taken into account.