Car Allowance, Company Fuel Rate - What am I Owed?!
Discussion
This question has inevitably been asked a million times but I never feel a comprehensive answer has been provided from reviewing other posts.
I work for a company as a permanent member of staff. I am paid a car allowance along with my salary on a monthly basis.
I took the car allowance sum, after tax, and used it for a personal lease. I lease a vehicle which I now have insured for business purposes and use for business.
When using the car for work, I am paid a mileage rate of (recently amended), 11p per mile.
This is the multi million dollar question -
Is this car considered "personal" and therefore can I claim back the 34p for the first 10,000 miles.
Or is it as the firm would have me believe, a business car, and therefore I can only claim back the VAT on the difference, ie roughly 7p per mile?
A reasoned response from someone in the know would be most helpful.
Regards.
Malcolm
I work for a company as a permanent member of staff. I am paid a car allowance along with my salary on a monthly basis.
I took the car allowance sum, after tax, and used it for a personal lease. I lease a vehicle which I now have insured for business purposes and use for business.
When using the car for work, I am paid a mileage rate of (recently amended), 11p per mile.
This is the multi million dollar question -
Is this car considered "personal" and therefore can I claim back the 34p for the first 10,000 miles.
Or is it as the firm would have me believe, a business car, and therefore I can only claim back the VAT on the difference, ie roughly 7p per mile?
A reasoned response from someone in the know would be most helpful.
Regards.
Malcolm
Lower mileage amount, it will be in your contract/ car scheme details somewhere.
What you can do is claim the tax back on the difference between what your company pay you per mile and the HMRC approved rate via a simple form or your tax return. Edit as just re read your OP, it's not the VAT that you can claim back. It's tax relief on the expenses that you claim, ie 34p x your highest marginal rate
What you can do is claim the tax back on the difference between what your company pay you per mile and the HMRC approved rate via a simple form or your tax return. Edit as just re read your OP, it's not the VAT that you can claim back. It's tax relief on the expenses that you claim, ie 34p x your highest marginal rate
I'm sure the real experts will be along soon, but as far as I know it's this:
The car is yours, regardless of the allowance, since the allowance is essentially just wages that you're taxed on.
The 11 pence is the standard mileage rate for fuel only which is what you'd get if you had a company car, and as far as the company is concerned is the limit of their liabilities since they're paying you an allowance already to buy and maintain your car.
However, you can claim tax relief on the difference between this and the 45 pence limit (first 10,000 miles). Depending on your tax rate, this is at least 20% of 34 pence (the difference), or close to 7 pence. You can't claim the whole 34 pence back.
The car is yours, regardless of the allowance, since the allowance is essentially just wages that you're taxed on.
The 11 pence is the standard mileage rate for fuel only which is what you'd get if you had a company car, and as far as the company is concerned is the limit of their liabilities since they're paying you an allowance already to buy and maintain your car.
However, you can claim tax relief on the difference between this and the 45 pence limit (first 10,000 miles). Depending on your tax rate, this is at least 20% of 34 pence (the difference), or close to 7 pence. You can't claim the whole 34 pence back.
It's a personal lease paid for out of your allowance.
It's not a company car!
Who pays the insurance? Who puts tyres on it when it needs it? This is why you get the higher rate as the ppm has to take into account all of these things.
You don't pay company car tax.
There's absolutely no question as to what it is and what you should be getting.
They're having your pants down IMO
https://www.gov.uk/government/publications/rates-a...
It's not a company car!
Who pays the insurance? Who puts tyres on it when it needs it? This is why you get the higher rate as the ppm has to take into account all of these things.
You don't pay company car tax.
There's absolutely no question as to what it is and what you should be getting.
They're having your pants down IMO
https://www.gov.uk/government/publications/rates-a...
Right,
I think I am therefore right in saying from reading all the responses above that I am within my rights to claim back the relief at 20% for my business mileage completed in the last year so rough man maths, 7p x 7,000 business miles covered, resulting in a "payment" of £490.00
Is there any way that the company could be "Claiming" this difference for me at source before paying my salary each month as this has also been suggested?
I think I am therefore right in saying from reading all the responses above that I am within my rights to claim back the relief at 20% for my business mileage completed in the last year so rough man maths, 7p x 7,000 business miles covered, resulting in a "payment" of £490.00
Is there any way that the company could be "Claiming" this difference for me at source before paying my salary each month as this has also been suggested?
Do it yourself. Don't rely on your employer or HMRC sorting it out for you.
For tax year 2014/15, how many business miles did you do and how much was paid to you (actual total - not pence per mile) by your employer?
Are you a basic rate taxpayer or do you pay some tax at the higher rate?
For tax year 2014/15, how many business miles did you do and how much was paid to you (actual total - not pence per mile) by your employer?
Are you a basic rate taxpayer or do you pay some tax at the higher rate?
Eric Mc said:
Do it yourself. Don't rely on your employer or HMRC sorting it out for you.
For tax year 2014/15, how many business miles did you do and how much was paid to you (actual total - not pence per mile) by your employer?
Are you a basic rate taxpayer or do you pay some tax at the higher rate?
I will do it myself, however I am wondering if it is possible that it has already been "paid" and therefore I would not be elligible. For tax year 2014/15, how many business miles did you do and how much was paid to you (actual total - not pence per mile) by your employer?
Are you a basic rate taxpayer or do you pay some tax at the higher rate?
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
FordMan1 said:
I will do it myself, however I am wondering if it is possible that it has already been "paid" and therefore I would not be elligible.
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
It's your tax, no one elses so won't have been claimed anywhere.I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
It is simple, see here:
https://www.gov.uk/tax-relief-for-employees/how-to...
and here https://www.gov.uk/tax-relief-for-employees/busine...
Form P87 will be your friend
You can also go back a few years if you've been in a similar situation and not sorted it historically. HMRC may well amend your tax code to save you bothering in future years, Just make sure your mileage and rates stay the same
FordMan1 said:
I will do it myself, however I am wondering if it is possible that it has already been "paid" and therefore I would not be elligible.
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
7,400 miles at 45p per mile means that you could have been paid up to £3,330 by your employer (7,400 @ 45p) without you being taxed. As they only paid you 11p per mile, they will have paid you only £814 in total (7,400 @ 11p). This means you could make a claim for the missing £2,516.
However, HMRC will not refund you £2,516. They will allow you to make a tax relief claim of £2,516.
If you pay tax at 20%, this means they will refund you £503.20 (£2,516 x 20%).
If you pay tax at 40%, this means they will refund you £1,006.40 (£2,516 x 40%).
You can make the claim in two ways.
You could request that you sign up for Self Assessment and complete and submit a Self Assessment tax return for 2014/15.
Alternatively, you can complete and submit an HMRC form P87. However, there is an upper limit of £2,500 for claims using a P87. So, in theory, to claim £2,516 calculated above you would have no choice but to voluntarilly register for Self Assessment.
However, the expedient thing to do would be to claim just under the £2,500 level and complete a P87.
Keep an eye on the differential each year as your employer is being extremely mean. 11p a mile is way too low for a person who has to use their own personal car extensively for work related journeys.
Eric Mc said:
11p a mile is way too low for a person who has to use their own personal car extensively for work related journeys.
Not necessarily. The dude is being paid an amount before he turns a wheel. I guess it all depends how much this allowance is. A lot of firms would only pay a mileage rate after x miles have already been expended. If the guy is getting 11p from mile one plus an allowance it may be actually generous (if not particularly tax efficient)Eric Mc said:
FordMan1 said:
I will do it myself, however I am wondering if it is possible that it has already been "paid" and therefore I would not be elligible.
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
I did 7,400 miles for the period 2014/2015 and working that out aint too simple as it would be paid as combined expenses payments via cheque.
I am a basis rate payer and pay nothing at the higher rate.
7,400 miles at 45p per mile means that you could have been paid up to £3,330 by your employer (7,400 @ 45p) without you being taxed. As they only paid you 11p per mile, they will have paid you only £814 in total (7,400 @ 11p). This means you could make a claim for the missing £2,516.
However, HMRC will not refund you £2,516. They will allow you to make a tax relief claim of £2,516.
If you pay tax at 20%, this means they will refund you £503.20 (£2,516 x 20%).
If you pay tax at 40%, this means they will refund you £1,006.40 (£2,516 x 40%).
You can make the claim in two ways.
You could request that you sign up for Self Assessment and complete and submit a Self Assessment tax return for 2014/15.
Alternatively, you can complete and submit an HMRC form P87. However, there is an upper limit of £2,500 for claims using a P87. So, in theory, to claim £2,516 calculated above you would have no choice but to voluntarilly register for Self Assessment.
However, the expedient thing to do would be to claim just under the £2,500 level and complete a P87.
Keep an eye on the differential each year as your employer is being extremely mean. 11p a mile is way too low for a person who has to use their own personal car extensively for work related journeys.
I have filled out and signed the form in the last hour having printed all previous mileage submission forms so hopefully it gets sorted relatively quickly.
Work are still adamant that they are claiming it back at source. Every month my car allowance sum on payslip does adjust slightly and a seperate column is added called expenses which when you add the two together, comes to my gross allowance a month of £250. I find this weird and have no particular explanation.
Car allowance doesnt cover the most basic form of car the firm would previously have given the employee, however that is for another time!
And, as has been suggested, review what happened in tax years 2011/12, 2012/13 and 2013/14. You can make a tax claim for those three years too.
I am always against having any tax refunds due to a taxpayer adjusted through their tax code - and I am even not keen on making actual tax claims through tax codes either.
Adjustments using tax codes make the tax coding very hard to understand and they will ensure that each and every year you will definitely pay the wrong tax under PAYE.
If offered the choice, "do you want the tax refund paid through a tax coding adjustment", I would suggest that you tick the "No" box and request that the tax refund be paid directly into your bank.
I am always against having any tax refunds due to a taxpayer adjusted through their tax code - and I am even not keen on making actual tax claims through tax codes either.
Adjustments using tax codes make the tax coding very hard to understand and they will ensure that each and every year you will definitely pay the wrong tax under PAYE.
If offered the choice, "do you want the tax refund paid through a tax coding adjustment", I would suggest that you tick the "No" box and request that the tax refund be paid directly into your bank.
Eric Mc said:
Type of car.
Running costs you personally have to meet of the car?
Audi A6 S Line on Personal contract hire, maintenance package including tyres and servicing based on 15k a year mileage for 2 year term.Running costs you personally have to meet of the car?
I am expected to have a car that is serviced, MOT'd if applicable and cover cost of tyres etc.
I trust this assists.
Edited by FordMan1 on Tuesday 21st April 15:42
2 sMoKiN bArReLs said:
Eric Mc said:
11p a mile is way too low for a person who has to use their own personal car extensively for work related journeys.
Not necessarily. The dude is being paid an amount before he turns a wheel. I guess it all depends how much this allowance is. A lot of firms would only pay a mileage rate after x miles have already been expended. If the guy is getting 11p from mile one plus an allowance it may be actually generous (if not particularly tax efficient)theboss said:
2 sMoKiN bArReLs said:
Eric Mc said:
11p a mile is way too low for a person who has to use their own personal car extensively for work related journeys.
Not necessarily. The dude is being paid an amount before he turns a wheel. I guess it all depends how much this allowance is. A lot of firms would only pay a mileage rate after x miles have already been expended. If the guy is getting 11p from mile one plus an allowance it may be actually generous (if not particularly tax efficient)I was saying that nobody can comment whether 11p is good, bad or indifferent without understanding the allowance.
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