Disclaimer: This article is intended as general guidance for small businesses and sole traders, but it is not financial or taxation advice specific to your situation. You should always consult your company accountant if you have any questions about how taxation rules apply to you or your business.
What is company fuel card tax?
Company fuel card tax in Ireland is a tax deduction from payroll employees may have to take if the fuel card is used for business and personal use. For business use only, there’s no additional fuel card tax implications.
Fuel cards Ireland tax implications
What fuel card tax implications there are depends on what the fuel card is used for. If the employee is using it for business and private use, then it counts as a Benefit-In-Kind and additional taxes must be paid. These charges will be deducted from the employee’s payroll.
What is a Benefit-in-Kind?
Benefit-in-Kind (BIK) is a taxable benefit employees get in addition to salary. They aren’t cash benefits. Most of the time, BIK lets the employee use something they don’t own including a company car and overnight accommodations.
Very few benefits are exempt from tax other than some public transport travel passes and business use computer equipment. Fuel cards can be counted a BIK under certain conditions.
Fuel card tax implications: business use only fuel cards
If you give an employee a fuel card or charge card for business use only, it doesn’t count as a BIK. In other words, it’s not a taxable benefit and in general, no further tax deductions or paperwork is required.
Fuel card tax implications: business and private use
Things get more complicated if employees are using the fuel card for business and private use. If they use the fuel card to refill for private use and don’t repay the business for those purchases, then they must pay taxes on those purchases.
In other words, if the employee has a fuel card for business and private use it counts as a BIK. Tax implications can include Pay As Your Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC).
We recommend checking with your accountant to see what fuel card tax implications your business will have to pay before giving an employee a fuel card as a BIK.
How do I work out which are business and personal journeys?
If your employees are using cards for business are personal use, there are fuel card tax implications in Ireland. To make sure your business is paying the right amount of tax, double-check your fuel card usage.
1. Check fuel card transactions on an online account
Most fuel cards in Ireland include a free online account. Make an account, log in and check all transactions. This includes all fuel cards registered on your system.
On your account, you can see all the transaction history since your fuel card was registered, filter by driver and card and see where the fuel card was used. Any discrepancies are easy enough to find and cards can be removed from the system quickly.
2. Use telematics to help log employee journeys
Telematics systems use vehicle trackers to see the location of a vehicle and where it’s been. The best systems let employees enter the reasons for each journey to help keep a log and make your bookkeeping easier. By using vehicle tracking devices, employees using cards for business and personal use without you knowing about it is impossible.
Company fuel card tax calculator
The good news is you can claim back some of your diesel costs on the Diesel Rebate Scheme and fuel cards can offer discount fuel prices in addition to that.
The bad news is if you’re going to have a fuel card as a Benefit-in-Kind, calculating how much tax an employee has to pay is a little complicated. It’s best to talk to your accountant about it and have it handled on the payroll. How much they pay for company fuel card tax depends on the tax band of the employee and how much fuel is purchased.
iCompario tip: Plug-in vehicles have a lower BIK rate
Fuel cards aren’t the only benefit companies can provide. Some businesses may wish to give an employee a car for work purposes. BIK tax rates for electric vehicles and hybrids are currently lower than petrol or diesel vehicles. EV business solutions can help you save money on tax and prepare for the phase-out of petrol and diesel.
Diesel Rebate Scheme rates
One of the best reasons to get a fuel card in Ireland is to make a claim the rebate. As long as you have a fuel card, your company can claim back a significant amount. This can be up to 7.5 cent per litre, but it depends on the current price of diesel.
The rates of the Diesel Rebate Scheme change every quarter. When the fuel price is at or below €1.23 per litre, there is no repayment available.
How can I claim back on my mileage?
The fuel card tax can get a little complicated, but one of the great benefits of having fuel cards are that they’re a great way to see your mileage. Most fuel cards come with an online system, where you can select any card in your system and see the mileage right away and how much you’ve spent on fuel.
Unlike using receipts and estimates, fuel cards are more accurate because you use them to pay for fuel. Invoices are stored in your account to download any time too, so you can submit them as evidence of your mileage claims.
How much can I claim back on my mileage
How much you can claim depends on the type of vehicle driven and how far you’ve travelled. Every employer can reimburse a certain amount tax-free, but that varies too! Check the Revenue site to see the latest mileage rates.
How to best handle company fuel card tax
Many small companies and sole traders wonder if it’s all worth the effort to bother with fuel cards at all because of the tax implications. But the potential savings are big and once you make the first step, it’s easy enough to handle the rest.
The best way to grapple with taxes is to hire a bookkeeper. For some small businesses, this might not be possible, so your next best option is to speak to Revenue and get some advice.
Once you’ve got your fuel cards, go on your online account and check your transactions. You get invoices here every billing period (usually every month or week). Download them and submit them as evidence of your tax claims.
How to get fuel card deals
Having company fuel cards can save your business money, make it faster to reclaim fuel and speed up expense claims.
As a free comparison site, iCompario can find offers on cards from all the big oil companies or multi-brand cards and deals with no minimum purchase fees or tie-in contracts.