Car allowance and fuel expense question.
Discussion
smithyithy said:
If however, you have a company car, or a monthly car allowance (both of which are classed as Benefit In Kind - BIK - and are taxable benefits), then you get the lower mileage rate.
For clarity, a car allowance is not classed as a BIK, it's classed as taxable (but I think non-pensionable) salary. Also the mileage rate you claim on expenses is solely down to your employer. You can claim tax relief at the rate you pay at on the difference of the amount you are paid and 45p for the first 10,000 miles and 25p for all miles after that each tax year.
Or another way, your employer can pay you £1 a mile if they like, you then would be taxed for the amount above the 45p/25p HMRC rates.
Matt UK said:
For clarity, a car allowance is not classed as a BIK, it's classed as taxable (but I think non-pensionable) salary.
Also the mileage rate you claim on expenses is solely down to your employer. You can claim tax relief at the rate you pay at on the difference of the amount you are paid and 45p for the first 10,000 miles and 25p for all miles after that each tax year.
Or another way, your employer can pay you £1 a mile if they like, you then would be taxed for the amount above the 45p/25p HMRC rates.
Cheers for clearing it up dude Also the mileage rate you claim on expenses is solely down to your employer. You can claim tax relief at the rate you pay at on the difference of the amount you are paid and 45p for the first 10,000 miles and 25p for all miles after that each tax year.
Or another way, your employer can pay you £1 a mile if they like, you then would be taxed for the amount above the 45p/25p HMRC rates.
I now need to find my mileage claims from my 3 previous employers (we TUPE'd between multiple companies and all had their own expenses systems and methods) as I should be able to claim back a decent amount from 2013/14
Basically you are claiming tax relief. With regards tax code, HMRC may assume you'll make a similar claim next year and adjust your tax code to give you a higher tax relief to the level of your claim.
In the same way that if you are a higher rate tax payer now, they'll assume in month one next year you'll still be a higher rate tax payer by that year end.
Personally I prefer to receive it as a one off payment, far more fun!!
Have a read up on gov website though. I think what I'm saying is correct, but it's a two hour exercise I do annually, so I'm no expert I'm afraid.
In the same way that if you are a higher rate tax payer now, they'll assume in month one next year you'll still be a higher rate tax payer by that year end.
Personally I prefer to receive it as a one off payment, far more fun!!
Have a read up on gov website though. I think what I'm saying is correct, but it's a two hour exercise I do annually, so I'm no expert I'm afraid.
Yeah, be careful, as HMRC will re-code you and take into account the business miles expense. All fine until you dont drive so much then you end up with a bill at the end of the year
When I do my self assessment, I like to look forward to the "bonus" of getting the tax back...so its like a savings scheme. When they send me the coding notice I ring them and reduce my code again, so I dont feel under pressure to do 10K or 20K miles a year to break even on my tax code
always knowing you are in credit and due something back is a big motivator and you look forward to doing your tax return each year. HMRC are very efficient (!) and usually the refund hits your bank within days of doing your return online
When I do my self assessment, I like to look forward to the "bonus" of getting the tax back...so its like a savings scheme. When they send me the coding notice I ring them and reduce my code again, so I dont feel under pressure to do 10K or 20K miles a year to break even on my tax code
always knowing you are in credit and due something back is a big motivator and you look forward to doing your tax return each year. HMRC are very efficient (!) and usually the refund hits your bank within days of doing your return online
bogie said:
Yeah, be careful, as HMRC will re-code you and take into account the business miles expense. All fine until you dont drive so much then you end up with a bill at the end of the year
When I do my self assessment, I like to look forward to the "bonus" of getting the tax back...so its like a savings scheme. When they send me the coding notice I ring them and reduce my code again, so I dont feel under pressure to do 10K or 20K miles a year to break even on my tax code
always knowing you are in credit and due something back is a big motivator and you look forward to doing your tax return each year. HMRC are very efficient (!) and usually the refund hits your bank within days of doing your return online
Thats almost what I was looking for. My mileage is bound to fluctuate and I'd much rather have a "bonus" at the end of each year. When I do my self assessment, I like to look forward to the "bonus" of getting the tax back...so its like a savings scheme. When they send me the coding notice I ring them and reduce my code again, so I dont feel under pressure to do 10K or 20K miles a year to break even on my tax code
always knowing you are in credit and due something back is a big motivator and you look forward to doing your tax return each year. HMRC are very efficient (!) and usually the refund hits your bank within days of doing your return online
Thanks all
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