Company Miles

[darkmonsta]

Hope someone can help me out... My company are nice enough to give me the choice of a company car or an allowance. I don't do many miles and love my current car so have taken the allowance.

As such I get to claim a rate per mile for when I'm doing company mileage. However this is lower than it actually costs me in petrol! Someone mentioned that you can claim tax back up to a certain amount per mile if your company reimbursement is less than a certain amount.

As you can probably tell from this post I'm not sure whether this is true, or, if it is true, what the amounts per mile are. Can anyone shed any light please, assuming this post makes any sense at all...?

Thanks

[mcflurry]

You can claim the tax back up to 40p a mile.
So if your company pays 30p a mile, and you do 500 miles that knocks £50 off your tax bill.

[darkmonsta]

Thanks, but is that true if I recieve a company car allowance? My company pays at 40p per mile if you're using your personal car and don't get an allowance but only 12p per mile if you do...?

[alfaspiderman2]

yes still true whether or not you get an allowance

you claim the tax back on the difference between 40p and whatever you're paid per mile

[r8bwt]

This can be a bit complicated but this is my general perception.

It is my understanding that if you for example do a hundred miles and your company pay a petrol/diesel allowance of 10 p a mile, then you can claim the tac back on the difference up to 40p. i.e 40p - 10p = 30p. So you can claim the tax back on 100 miles x 30p, so £30.

So you have an extra £30 of tax allowance, i.e if you pay 22% tax, you can claim 22% of the £30 i.e £6.60 So it is not as good as thinking you can claim the full £30. If you get what I mean.

Someone please say i'm wrong and you get the full amount back, I am in a similar position and have opted for the allowance, but seem to be doing mega mileage.

[agoogy]

I'm adding to this to keep the thread going and to add my 2p...
I'm on my 1st year of an allowance, and I get 12p a mile.
My boss is on an allowance and gets 12p...last year he recieved somewhere around £1000 directly apportioned to his mileage. I know no more than that.... he doesn't do HUGE mileage I assume something like 15-20,000 pa.

How does that fit in with people's understandings and maths?

[keithyboy]

r8bwt said:

This can be a bit complicated but this is my general perception.

It is my understanding that if you for example do a hundred miles and your company pay a petrol/diesel allowance of 10 p a mile, then you can claim the tac back on the difference up to 40p. i.e 40p - 10p = 30p. So you can claim the tax back on 100 miles x 30p, so £30.

So you have an extra £30 of tax allowance, i.e if you pay 22% tax, you can claim 22% of the £30 i.e £6.60 So it is not as good as thinking you can claim the full £30. If you get what I mean.

Someone please say i'm wrong and you get the full amount back, I am in a similar position and have opted for the allowance, but seem to be doing mega mileage.

As I understand it - your example is correct. Sorry I have several years worth of mileage to claim back as allowances as I only get 15p per mile from my employer. Unfortunately I don't do too many business miles.

Edited by keithyboy on Thursday 26th October 10:34

[mcflurry]

So the company gives you money for a car, surely 15p a mile should cover the fuel?

85.9p/litre is about £4 a gallon. 26mpg would cost 15p/mile in fuel.

The tax refund up to 40p should more than cover the servicing, and the company is covering the depreciation

[darkmonsta]

Problem is with buying V-Power at 92.9p per litre and then doing 300 miles out of 55 litres fuel (approx).

Works out at 24.8mpg, which is about 17 pence per mile! The car allowance covers the depreciation and running costs mind so not complaining, just not wanting to miss anything....

[Eric Mc]

As far as the Revenue are concerned, any additional salary paid to an employee christened "Car Allowance" is just, in effect, additional salary and will be taxed as part of your normal Gross Salary.

They are not concerned if the company then pays the employee "Mileage Claims" for use of his own personal car as long as the mileage claims are 40p or less per mile for the first 10,000 business miles and 25p per mile thereafter. As long as the payments stay at or below these rates, the employee will not be taxed in any way on the mileage payments received.

If the employer pays mileage rates LESS than the 40p/25p levels, the employee can make a claim of their own for the missing amounts between what the employer actually pays and the 40p/25p upper limits.

Don't forget, if any of the business trips involved carrying work colleagues, the maximum allowable claims increase by an additional 5p per mile for each passenger carried.

[deva link]

r8bwt said:

This can be a bit complicated but this is my general perception.

It is my understanding that if you for example do a hundred miles and your company pay a petrol/diesel allowance of 10 p a mile, then you can claim the tac back on the difference up to 40p. i.e 40p - 10p = 30p. So you can claim the tax back on 100 miles x 30p, so £30.

So you have an extra £30 of tax allowance, i.e if you pay 22% tax, you can claim 22% of the £30 i.e £6.60 So it is not as good as thinking you can claim the full £30. If you get what I mean.

Someone please say i'm wrong and you get the full amount back, I am in a similar position and have opted for the allowance, but seem to be doing mega mileage.

No, you're right. But if the alternative is to have a company car, then you're paying less tax than if you took the company car.

[deva link]

darkmonsta said:

Problem is with buying V-Power at 92.9p per litre and then doing 300 miles out of 55 litres fuel (approx).

Works out at 24.8mpg, which is about 17 pence per mile! The car allowance covers the depreciation and running costs mind so not complaining, just not wanting to miss anything....

What you're supposed to do is buy a diesel something or other that does 50-60MPG. One of the problems that the government has identified with people opting out of company cars is that many of them have bought higher polluting cars (and often older, therefore even worse) than they had from their companies. There's a large body of opinion that thinks many of the allowances paid are too generous.

[deva link]

Eric Mc said:

If the employer pays mileage rates LESS than the 40p/25p levels, the employee can make a claim of their own for the missing amounts between what the employer actually pays and the 40p/25p upper limits.

I think it's always important to stress (as it's often misunderstood) that the employee only gets the tax back on the difference, at their highest rate, and not the full amount.

I used to get 15p/mile from my company and I paid 40% tax, so I got (40-15)@40% = 10p for the first 10K miles and (25-15)@40% = 4p for everything over 10K miles.
So as someone else mentioned earlier, if I did say 18K/yr business miles, I'd get £1320 tax refund.

[Eric Mc]

Of course.

[Dino D]

deva link said:

There's a large body of opinion that thinks many of the allowances paid are too generous.

I get 40p for fitrst 10k then 25p after that. I do at least 30k a year on business. So that gives me £9k per year.

I drive a 330i on LPG that costs me 11p a mile in fuel.

The rest of the costs:

Fuel: £3,300
Insurance: £1,200
Tax: £160
Tyres: £900.00 (assuming 1,5 sets per 30k miles at £600 per set)
Servicing: £700.00 (two services)
General repairs: £200.00
Valeting: £400.00 (£6 per car wash, 1 a week. If I didn't use my car so much for work it wouldn't get so dirty so I atrribute the cost to work)

Thats a total of £6860.00 per year in costs so you probably think-yipee I make a profit.
Not really. 30k a year kills the redisual values. The depreciation is hard to factor but it is high. My car get used heavily and shows stone chips, scuffing, scratches, interior wear etc compared with other cars of the same age so I will get less money for it.

It may turn out that the £9k per year cover all the costs and my depreciation. But what they do not factor in is the fact that I take the risk of ownership, not the company.
So if the clutch goes or something big like a gearbox, then I am stuck with a huge bill!
The allowance is not generous at all IMO.

The AA come up with a cost of 38.6 p/mile for running a diesel car over 30k miles pa:
www.theaa.com/allaboutcars/advice/advice_rcosts_diesel_table.jsp

[hendry]

deva link said:

There's a large body of opinion that thinks many of the allowances paid are too generous.

What can they do? It's salary. And who regulates salary, other than minimum wage, to ensure "fairness" there...?

No slite on you Deva, just the "large body of opinion".

[deva link]

Dino D said:

I drive a 330i

..but you're up against the green lobby who would of course be horrified that you drive a 330i.

Their point is that an allowance that allows you drive such a car is too generous.

[Dino D]

deva link said:

Dino D said:

I drive a 330i

..but you're up against the green lobby who would of course be horrified that you drive a 330i.

Their point is that an allowance that allows you drive such a car is too generous.

Its on LPG!
Not satisfy the green lobby but to save me money. However, I do feel good that my car is more 'green' now. My emmissions are alot lower now-I can't remeber the figures but i think its halved the CO2 and now there are 0 hydrocarbons (used to be 1)

Nice car...well I do 30k miles ayear and that car is my office. I need something decent. I used to have an old Civic with no a/c and do those sort of miles.

BTW I bought the car used with 50k on the clock so its being 'recycled' too. How green am I?
I also happen to work for a recycling equipment company. Can't beat that now can you?

[deva link]

hendry said:

deva link said:

There's a large body of opinion that thinks many of the allowances paid are too generous.

What can they do? It's salary. And who regulates salary, other than minimum wage, to ensure "fairness" there...?

No slite on you Deva, just the "large body of opinion".

One thing 'they' can do is to remove the tax rebate on mileage allowance, or reduce the allowance levels that are tax free.

I don't want this either - I drive a Merc!

[hendry]

deva link said:

hendry said:

deva link said:

There's a large body of opinion that thinks many of the allowances paid are too generous.

What can they do? It's salary. And who regulates salary, other than minimum wage, to ensure "fairness" there...?

No slite on you Deva, just the "large body of opinion".

One thing 'they' can do is to remove the tax rebate on mileage allowance, or reduce the allowance levels that are tax free.

I don't want this either - I drive a Merc!

Ah, but that would damage the hoardes who are requiredto use their cars for business use occasionally but don't get an extra dollop of salary dressed up as a "car allowance". And you can't stop car allowances, are they are recognised as just straight alary - they are only excluded by employers so they don't have to include that portion in salary reviews.