The Fixed Profit Car Scheme (FPCS) is a neat way to reimburse your staff for using their own cars for business travel and claim the cost against your corporation tax bill.
The scheme pays:
🔹 45p per mile for the first 10,000 miles in any tax year
🔹 25p per each additional mile
🚘 Directors: you can claim it and pay it to yourself, too. You keep a record of your mileage (using a simple Excel or on a mileage app), including where and who you saw. If that also ties up with your Outlook calendar, you are good 👮♂️ .
🚘 Employees: If you as an employee are paid less than these rates (e.g. you are paid company car rates if you receive a car allowance) you can claim further tax relief for your expenses. If your employer pays more, you are taxed on the difference (this is why few employers pay more – its an admin pain).
Why 45p? The rate was designed to cover the cost of insurance, servicing and wear and tear on your car, not just the petrol or diesel.
The trouble is, as the Association of Taxation Technicians (ATT) has reminded us, these rates were set in 2011.
In 2011, Adele was at the top of the charts with “Someone Like You”.
In 2011, Dimitar Berbatov and Carlos Tevez were joint Golden Boot recipients in helping Alex Ferguson’s Man U win the Premier League.
Quite a bit has happened since then.
The ATT calculates that if the rate had kept pace with inflation, it would be 64p for the first 10k miles today.
I hate to turn up out of the blue, uninvited. But Ms Reeves, you could spread a bit of cheer to small businesses if you increase the FPCS 🚗 rates.
I won’t hold my breath, of course.