Claiming 45 pence per mile.

[HBFS]

Just looking for advise...
I used to have a fuel card and car allowance but that had to go and so I've started paying for business travel expenses upfront. (Employed by a large company.)

I've been claiming 28ppm from my company for all business travel so far, but I'm told I can claim the difference up to 45ppm back. (For the first 10k miles)

How do I do this, and how often can I do it? I have tried searching for forms and guides but have just come across companies wanting to do it on my behalf and charge.

My car needs a service and 4 new tyres soon, I'd like to be able to pay for this with the claim if possible.

Any help much appreciated

[mrmr96]

HBFS said:

I've been claiming 28ppm from my company for all business travel so far, but I'm told I can claim the difference up to 45ppm back. (For the first 10k miles)

Not quite.

You can't claim the difference back. What you can claim is the income tax on the difference.

So say you do 10k miles in a year. Your employer will pay you 28p x 10k = £2,800.
However the HMRC rate for the first 10k miles is 45p, so they would allow you £4,500.
The difference of £1,700 can be offset against your earnings in the year, to lower your tax bill.

So if you were a 40% tax payer then your income for the year would be reduced by £1,700 for tax purposes, and so if you'd been on PAYE all year then you can reclaim from HMRC the amount of income tax you overpaid. So you'd get a cheque from HMRC for 40% x £1,700, being £680.

HTH

[HBFS]

Ahh ok, so with that in mind it sounds like you would only claim once a year. Which form do I need to fill out?

Thanks

[otherman]

I do it on my tax return. If you don't do one you may be best calling the IR and asking them. I've always found them helpful.

[mrmr96]

HBFS said:

Ahh ok, so with that in mind it sounds like you would only claim once a year. Which form do I need to fill out?

Thanks

You need to fill in a self assessment tax return.

Yes, it's a once a year thing. The personal tax year runs 6th Apr to 5th Apr the following year, and the self assessment form has to be filed before 31st Jan the year after.

So for the current year, it started on 6th Apr 2012, finshes on 5th Apr 2013 and the return is due before 31 Jan 2014. But you can file any time after 5th Apr 2013. Indeed if you're due a refund then do it sooner and you get your refund sooner.

You start by applying to be assessed here:
https://online.hmrc.gov.uk/registration/

Then when you do your tax return you can do it all online. There's a few hoops to jump through to get it all setup, and lots of passwords as I recall. But the forms are pretty straightforward. You'll need your P60 from work which will detail what you earned, and what tax you paid. Then when you do the return there will be a section where you can put expenses incurred, so I think you have to put the £4,500 (or whatever it is at the 45p rate) and expenses reimbursed (where you put the £2,800 you were given by work). This reduces your income by net £1,700. Therefore the tax is assessed on a lower figure than on your P60 and hence you've overpaid your income tax via PAYE and you'll get a refund by bank transfer shortly afterwards.

[Eric Mc]

In many ways, the simplest way to do this is to elect to start completing Self Assessment tax returns. This will mean that you can make this claim (and any other claims you might want to make) by filling in the appropriate section of the tax return. Beware, of course, that a Self Assessment tax retrurn requires you to declare all your income as well as all your claims.

There are non-self assessment methods of making claims available but the self assessment route is probably the best and most straightforward.

[sumo69]

Eric/OP

You may want to read this - no need to fill in Tax Returns:

If you don't have to fill in a tax return, you can get tax relief for your allowable expenses by:

letter
phone
filling in form P87 Tax relief for expenses of employment

By letter

The first time you ask for tax relief for your expenses you'll have to contact HMRC in writing. If your expenses are over £1,000 they will ask you to fill in form P87 to give more details.

By phone

If you phone HMRC to ask for relief for your expenses they will only be able to give you tax relief if all of the following conditions are met:

your expenses are less than £1,000 (or £2,500 for professional fees and subscriptions)
you've claimed them in a previous tax year for the same employment
HMRC has accepted your earlier claim
you haven’t already been sent a P87 to complete

If you meet the conditions, HMRC will give you tax relief right away and repay any tax you've overpaid. Otherwise, you'll have to fill in form P87 before they can allow your claim.

Form P87

HMRC will send you form P87 if any of the following apply:

you ask them to
you claim expenses over £1,000
it's the first time you've claimed
you're claiming expenses for a year before the previous tax year

The form asks for details about your expenses and how you worked out the amount you want to claim.

If you don't fill in form P87 after HMRC sends you one, they won't be able to allow your expenses claim. This means that you might pay too much tax.

Hope that helps.

David

[Eric Mc]

I did mention there were other non Self Assessment methods.

I actually think more people should complete SA forms - especially those who are higher rate taxpayers with expense claims and additional income to declare as it puts the taxpayr in control of the situation to a better extent..

[mrmr96]

sumo69 said:

P87

Cheers, I didn't know about that.