17 August 2020
For small businesses with petrol, diesel and even electric vehicles, there are many fleet fuel card benefits which are not just the preserve of big companies and fleets running hundreds of cars, vans and trucks.
What is the best fuel card for a small business?
There are a number of items you need to tick off when finding the best fuel card for a small business.
By choosing the right one, you can access fuel out on the road where it suits your business operation and drivers.
With employees’ time and resources at a premium, you can provide them with a solution that limits deviation off a route, or offers wide choice, and gives them intelligence and insight into where to get the cheapest fuel through online price checking and mapping.
How does a fuel card work?
Employees can use fuel cards to fill up through an approved network of fuel stations that work with the card issuer. After an agreed credit period the business is invoiced for the transactions due to be repaid.
When paying for fuel using a fuel card, drivers will often have to supply their vehicle’s registration number and mileage. This information is then detailed on one HMRC-compliant invoice for a business, enabling you to easily match spend to business trips.
By giving employees a fuel card, businesses remove the administrative headache of processing and refunding expense claims and drivers don’t have to pay for fuel with their own money, and then claim it back from you at a later date.
How can SMEs use business fuel cards?
Every pound counts in a small business and using a business fuel card can help ensure your drivers are buying the cheapest petrol and diesel they can.
There are a number of ways you do this. One is through the use of supermarket fuel cards, such as the Allstar Supermarket+ card, which limit drivers’ purchasing to low cost sites throughout the country.
But that might not suit how your business operates if there are no supermarkets nearby. Instead, you could look for a provider which offers savings on pump price.
Often fuel card suppliers provide access to interactive maps and site locators letting employees search for the places with the cheapest fuel.
With a business fuel card, SMEs can save even more though, through offers such as Allstar’s Discount Diesel network, which produces discounts of up to 10p per litre across 1,300 stations nationwide*.
What are the other benefits of a fuel card?
For many small businesses, cash flow is an issue many encounter when hidden costs suddenly appear. One of these costs is fuel.
If a company operates a pay and reclaim system, it might only find out at the end of each month what it owes employees. And that is if the employees are efficient at handing in expenses. Plenty just leave them for months, and suddenly having to pay them can affect cash flow.
By using fuel cards such as those from Allstar, businesses can access 24/7 online account management through Allstar Online, with reporting dashboards you will always know what is being spent. The result is avoiding being hit by unpleasant, surprising bills.
Is it worth getting a fuel card?
There’s a significant potential tax cost saving using fuel cards, and that’s VAT. Every business owner will have had that sinking feeling when an employee hands in crumpled receipts with barely any details on them or has lost the receipt and the associated uncertainty of HMRC accepting or rejecting VAT claims.
With a fuel card, you know that all transactions are consolidated onto one HMRC-compliant invoice ready to help you reclaim the tax, meaning reduced paperwork and no need to collect receipts too. So not only do you get the VAT back, you save time and money doing it.
Also, when you are juggling many different tasks, keeping track of employee fuel spend is an unnecessary burden. By using business fuel cards, you can set automatic limits and controls so that your supplier takes the weight off your shoulders.
What this means is drivers can only buy specific fuels, or vehicle related products such as oil or AdBlue, and even limit the specific amounts, so you don’t have to have those awkward, time-consuming conversations about what they bought and why it was not acceptable.
With an Allstar fuel card, you gain access to an online dashboard through Allstar Online, that shows all purchasing, and allows you to easily produce reports showing what is being spent, where, by whom, mileage and what MPG is being achieved, so you will always know where the business stands, where you can make improvements, all without having to spend a long time collating figures and collecting receipts.
Do I get taxed on a company fuel card?
If employees use a company fuel card to cover all or part of their private travel (non business mileage), including journeys to and from work or weekend travel, where they are using company funds to pay for their personal expenses. This makes it a taxable benefit and employees may have to pay benefit-in-kind (BIK) tax.
The amount an employee would pay is based on a figure of £24,500 (for the 2020/21 tax year), multiplying it by the same percentage as the car benefit (based on its CO2 emissions and fuel) and then by the employee’s income tax banding.
To work out the cost, HMRC offers an online car fuel benefit calculator.
Similarly, a business will face BIK tax if they provide free fuel as it is essentially an unpaid perk. A business would also have to pay Class 1A National Insurance on the value of the fuel benefit, if employees do not pay back the fuel they use during those private trips.
The simple solution is that employees pay back the non-business fuel costs using the Government’s Advisory Fuel Rates (AFR).
*Savings on Diesel can be made at participating Discount Diesel sites on our network when the card is swiped.