Whether you operate a business with a fleet of drivers, or you’re a self-employed individual who just wants to streamline their fuel management – is a ‘fuel card’ the solution?
Let’s look into what a fuel card is, and whether it’s worth arranging one for your business.
What is a fuel card?
A fuel card is a bit like a credit card, but it can only be used to buy fuel and only from designated fuel stations.
The card holder is able to refuel, and the cost is charged directly to the business rather than the driver – so they don’t need to use their own funds or worry about claiming the cost back from their employer or business later.
For the business it means they don’t need to spend admin time reimbursing anyone and, depending on what type of fuel card you have, you could also save money on the fuel itself.
Who is a fuel card for?
A fuel card can benefit anyone who uses a car for business purposes. They’re often used by businesses operating fleets of vehicles, such as logistics firms or couriers, but businesses with fewer vehicles can also benefit.
How do company fuel cards work?
Fuel cards are designed to make the process of paying for refueling easier for businesses. The exact terms can vary between providers but in general, drivers will go to an approved petrol station and use the fuel card each time they need to top up their fuel.
This transaction is processed through the fuel card provider, along with a record of other details such as the amount of fuel purchased, the vehicle’s mileage at the time of purchase, cost, and location.
Rather than making the payment straight away, the fuel card acts a bit like a credit card with the business either paying the balance off on a regular basis, or making agreed repayments.
What are the benefits of using a fuel card?
Fuel cards definitely have some benefits, including:
- Cost savings: This varies, but some fuel card providers will offer discounts of up to 8p per litre of diesel
- Manage overspending: You can set limits on fuel cards to ensure drivers are only purchasing fuel, and nothing else. You could also restrict the amount of fuel a driver can purchase in one transaction, or over a period of time.
- Efficiency: All fuel purchases are automatically compiled into one single HMRC-compliant invoice. It frees up a huge chunk of time chasing individual drivers for receipts and records, and then logging each expense individually.
- Improved fleet management: You’ll have more information to feed into calculations around vehicle performance, route efficiency, and fuel consumption
Does a fuel card come with tax implications for employees?
If you give your employees a fuel card for personal usage it will be considered a ‘benefit in kind’, so they’ll need to pay income tax on the value of the benefit (and you’ll pay employer’s NI on it too). To avoid this from happening they need to either:
- Only use fuel cards for business purposes
- Refund the company for any private travel
Can I still reclaim VAT using fuel cards in my business?
Yes, you can still reclaim the VAT you pay on fuel if you use a fuel card, but only where it relates to business travel. Any personal mileage funded by the fuel card will be at the expense of the business so you’ll need to ensure employees only use the fuel card for business purposes, and reimburse you for any private fuel usage.
Are fuel cards useful if you’re self-employed?
Self-employed individuals may find fuel cards useful to track things like fuel expenditure. They also tend to involve less processing than lots of receipts, so they could definitely be useful if you’re looking to streamline your fuel management.
Can anyone apply for a fuel card?
No, they’re only for businesses and self-employed individuals who use cars and vehicles for business purposes. If you do want to apply and you are using fuel for business purposes, you just need to contact the fuel card provider you’re interested in. Some popular ones are fuelGenie, BP, and Shell UK.
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