Following on from the other business mileage/car thread.....

[Mattyboy101]

I am due to complete a 'sandwich placement' next year as part of my Uni course, working for the company that has sponsored me through University.

I turn up to the regional office on my first day, and am then told what site I am going to be based at. Last Summer it was an 80 mile round trip daily, and there is talk of it being about 110 mile round trip on the placement!

I was told on the first day of my Summer job in my induction that I would be able to claim all mileage at 40p/mile, so I thought 'brilliant' and went off and bought myself a nice 2.0 (not the fastest car in the world, but not bad for a 19yr old, and certainly not the best MPG!).

Later when it came to filling in the mileage for my 1st month, I was told that I could not claim 40p/mile as I was travelling to a 'place of work', but would be given a token amount based upon straight line distance to work (about £3k p.a. IIRC - broken down into a non taxable and taxable amount - but I was only there for 3 months so received less than that.) Worked out to about 15p/mile. This wasn't the best news, but after arguements with HR and Salaries dept (PAYE if that makes a difference) I relectantly agreed to it.

Next year if I am doing the same, there is no way that the £3k will cover my depreciation due to mileage and otherwise, extra insurance due to mileage and business use, fuel and other incidental costs.

Some friends were talking about being able to claim back the difference between what the company pays, and the 40p guideline rate, however I was told this is not possible since I am going to a 'place of work' (even though this would not be the place I agreed initally to work, but have been subsequently told to go there).

Other people (practically everyone else) in the company get allowances, or company cars, if they are site-based, and their fuel rate is not far off of mine, which takes the michael in my opinion.

Hope somebody out there can give me some advice as to my situation!!

Regards,

Matt

[Vee]

Whatever your company pays you below 40p, you can claim tax releif on the difference.

1st 10k per year : Co. pays 15p per mile, you claim 25p * tax rate from IR
Over 10k : Co. pays 15p per mile, you claim 10p * tax rate from IR

Personally I think that by giving you 15p the company is accepting that your journey is business mileage.

[Mattyboy101]

Can you only claim this off of tax paid, as on my last summer placement I didn't pay tax as under the threashold?

[voyds9]

Travel to and from your normal place of work is not claimable. However if you are based at one office (say headoffice) and have to travel to another site (say110 miles daily) then this should be claimable.

[Eric Mc]

As explained, the normal "commute" is not claimable in virtually any circumstances, Travelling to "outstations" or the employer's customers/clients is allowed.

You should therefore be able to make a mileage claim for the distance from your normal place of work to these other places. If the employer was not paying you 40p per mile, you can claim the difference between what was paid to you and the 40p (up to 10,000 miles). Don't forget, the Revenue refund you the differnce at the rate of tax you were paying, not the actual mileage amount. Eg:

2,000 miles at 40p per mile at 22% tax = £176
2,000 miles at 40p per mile at 40% tax = £320

Obviously, as a student, you might not have earned enough income in the year to be liable to any tax. If you do not pay any tax, making claims for additional tax relief is a bit of a waste of time as you may not be due anything back.

>> Edited by Eric Mc on Sunday 26th March 12:01

[Mattyboy101]

The main point of contention we are having is the definition of 'the normal place of work'.

I have been told that seeing as the vast majority of the time I will be going straight to site (110 miles away) without going near the office, then the site is my normal place of work, and as such I cannot claim the 110 miles, but I could claim the 10 miles to the office whenever I visit!!

But as I am being given a token amount, does this not mean that my employers see the site as a normal place of work, but in exceptional circumstances? As such would the Inland Revenue see it the same way?

[vee]

Will you be paying ANY tax this year ?
If not then, as Eric says, you may not be able to claim anything back.

I think the issue is that your employer is expecting you to bear the majority of the travel cost. Normally you could tell them that its not worth your while and look for another job.
However as you're a student on placement, possibly with a view to getting offered a position there when you graduate, it might not be in your best interests to do this.
Difficult decision for you to weigh up - can you bear the additional travel cost for 3 months ?
Or, can you get an alternative placement ?

[Eric Mc]

I think in these circumstances that your "normal place of work" would be your employer's main office. Is the site actually owned by the employer or used by one of your em[ployer's customers?

[Mattyboy101]

It's a construction site, I am a Quantity Surveying undergraduate.

I will be paying tax on my placement, as I will be there for 12 months.

I could get a closer (although not by much) alternative placement, however it won't be as good experience for me in the long run and in terms of my RICS application.

Eric, the site would be owned by my employers customers.

Thanks for the help

[Eric Mc]

If that's the case, then I think you would have a valid claim.

[mattyboy101]

Dragging this back up again.....

I have been told roughly where I will be working, a lovely 110 mile actual round trip from my house.

I have been given the form by which the rates are calculated, but it is calculated radially so I will be getting credit for 38 miles radial!!

£2563.00 p.a. is given to me tax free, and a further £1748.00 that is taxable. This works out after tax to roughly £3900, which given my expected actual mileage (roughly 25k) makes my rate a rather pitiful 15.6p

I should be getting paid roughly £7000 (40p x 10k + 20p x 15k)

Now when I come to claim back the difference on the P11D, that is £4437 (£7000 minus the untaxed £2563), I will have a problem.

The salary, as a lowly placement student is only £14,500. With a net take home of just over £11,500, and a tax liability of only £1,900. I will be £2537 short - a considerable sum of money, given the salary they are paying me.

I take it I have to either take this hit on the chin, or argue further with the company and that there is nothing I can do outside of this?

Sorry for the long post, I hope the numbers make sense/add up

[Eric Mc]

Are you saying that you would prefer that the company paid you a larger element of your salary under the 40p per mile mileage allowance rather than as straightforward salary?

Don't forget that 40p per mile is only tax free up to the first 10,000 business miles. After that, the tax free mileage allowance drops to 25p per mile.

[mcflurry]

..or buy a more fuel efficient car?

For example my friends new focus diseasal does 60ish to the gallon. At £1 a litre that is only 7.6p a mile in fuel costs. Even if he gets 50mpg thats 9p a mile...

[Eric Mc]

The Mileage Allowance is based on the ENTIRE cost of running a car, not just fuel. It is NOT a fuel allowance.

[mattyboy101]

I do plan to get a Focus diseasal, so should be getting decentish MPG - but was just fighting for what I thought was right. I spend all day at work making money for the company, and a happy employee is bound to put in more effort (and therefore make more money) than a disgruntled one. IMHO of course.

As Eric said the rates are supposed to represent all my costs, which due to my age and other factors, will cost more than 16p/mile

[deva link]

mattyboy101 said:

I have been given the form by which the rates are calculated, but it is calculated radially so I will be getting credit for 38 miles radial!!

Whose form is that?
Is that 38 miles per day, or each way?
How far is it if you take off the distance from home to regional office?

mattyboy101 said:

£2563.00 p.a. is given to me tax free, and a further £1748.00 that is taxable.

Where do those figures come from?

mattyboy101 said:

I should be getting paid roughly £7000 (40p x 10k + 20p x 15k)

The IR max rates are 40p and 25p. But they are max rates, employers can pay less (you'd get tax rebate) or more (you'd pay more tax).

mattyboy101 said:

Now when I come to claim back the difference on the P11D, that is £4437 (£7000 minus the untaxed £2563), I will have a problem. The salary, as a lowly placement student is only £14,500. With a net take home of just over £11,500, and a tax liability of only £1,900. I will be £2537 short - a considerable sum of money, given the salary they are paying me.

Anything you claim back is only refundable at your normal rate of tax. So even if you could claim £4437, you'd only actually get 22% of that back = £976. The upside is that you *do* have this covered! (Although I still have no idea how you're working this out).

mattyboy101 said:

I take it I have to either take this hit on the chin, or argue further with the company and that there is nothing I can do outside of this?

You could be sanquine about it and recognise that many students would have to fund their travel costs themselves. My daughter trained as a teacher and during her PGCE year her *total* allowance/bursary was £7000 and they said it was only that 'generous' as it was intended to cover her travel costs.
More helpfully, is there any possibility that the company could provide a car and fuel for you? If you choose something with lowish Co2 and low list price, then you may find that's a better bet than having to buy so much fuel and putting such a lot of miles on your own car.

>> Edited by deva link on Friday 26th May 22:37

[mattyboy101]

The Form isn't really a form, it's a table created by the company with distance from home on the left hand side, and the amount paid (listed in 2 amounts, taxable and non taxed) in the main body. 38 miles is the straight line distance from my house to the site, however the actual distance is 55 miles on the roads. It is roughly 10 miles straight line distance to the office, but about 12 on the roads.

The figures I listed are those taken from the table I described above, and are the amounts next to the 38 mile marker.

I meant to put 25p, but forgot and put 20p.

That is interesting, and it makes sense - the way it was previously described to me was that the IR gave you the full amount back between your mileage payment and the AMAP - it did make me wonder why the IR (HMRC as it should be) were so generous!

As for a company car, there is no chance that that becomes an option until I am qualified and over 21.

As for the side point, yes I am doing ok for just a placement year compared to some other career paths (however I also have friends on placement years in other industries earning in excess of £30,000), but compared to my fellow coursemates with other firms I am being hard done by. They are being paid higher salaries, and with 25p+/mile rates. I even had sponsorship offers from these other firms, and I turned them down, as in my naive days I still had some sense of loyalty in business, and I had done a work experience placement with this company at 16. With hindsight I could have saved myself a lot of hassle, and made a lot more money! We live and learn I suppose.

Thanks for the replies so far

[Eric Mc]

The mileage from your home to main base of work is NEVER allowed for tax purposes. This is called the "normal commute". Trips from your place of work to customers, clients, suppliers, sites etc ARE allowed.

If you travel directly from your home to a client, customer etc, you should only claim travel costs if the distance travelled exceeds your normal commute.

>> Edited by Eric Mc on Saturday 27th May 08:50

[deva link]

Eric Mc said:

The mileage from your home to main base of work is NEVER allowed for tax purposes. This is called the "normal commute". Trips from your place of work to customers, clients, suppliers, sites etc ARE allowed. If you travel directly from your home to a client, customer etc, you should only claim travel costs if the distance travelled exceeds your normal commute.

For Mattyboy's clarity here, if I may, 'claim' means claim tax relief from the tax man.

Mattyboy:
There's no problem (though unusual?) for a company to pay a mileage allowance for commuting to the normal place of work but it is taxable. Hence there are two amounts - one to cover the commute (which you'll have to pay tax on) and one to cover the distance from normal place of work to the site (which you can claim a tax rebate (at 22%) on any amount less than 40/25p.

The distances calculations seem odd, though - do they expect you to travel by helicopter? What's the reasoning for doing it by straight line?
Are they paying you for 10 miles to work, then 38 (or 28?) miles to site?

I guess there's absolutely no reason why you couldn't claim the the actual distance from the tax man, although (as Eric Mc suggests) you should use triangulation and only claim for the difference between the mileage to the office and the mileage to the site (which from the figures given, looks like 43 miles).

If it makes you feel any better, triangulation catches my wife out - most of her calls are nearer home than the office (and she doesn't get commuting paid) so she gets virtually no business mileage, even though she's using her own car for work.

>> Edited by deva link on Saturday 27th May 09:34

[Eric Mc]

It can get confusing, can't it.