HRMC Car Allowance

[NickNJ]

I do about 10k a year business miles.

I receive eua from my employer at £125 p/month before tax and 16p a mile.

My current car, 1.8ltr, costs 24p a mile for fuel alone. Depreciation and maintenance also outstrip the monthly EUA.

Are there a any tax loopholes available as I'm loosing out heavily whilst completing my job duties.

[pherlopolus]

You can claim back the tax on the difference between the 16p and whatever hmrc say you can get as a maximum (forget the the actual numbers as our payroll look after it all)

[wiggy001]

NickNJ said:

My current car, 1.8ltr, costs 24p a mile for fuel alone.

Are you sure? My 3.0 BMW Z4 only costs around 20p a mile for fuel on average.

[Countdown]

You can claim the tax back on the difference between

The amount of EUA plus mileage payments you get during the year

and

45p x business mileage during the year.

So, using your figures, assuming you do 15,000 business miles.

From your employer you would get (£125 x 12 months) plus (16p x 15000miles) = £3,900

HMRC think your allowable car expenses should be 0.45p x 15000 miles = £6,750

So you would be entitled to a reimbursement of the tax paid on the difference.

[NickNJ]

Many thanks for the replies.

I'm struggling to find the form I need to fill in to claim? any idea? I can find this...http://www.hmrc.gov.uk/manuals/eimanual/EIM31360.htm

My claim calculations are as follows, think im correct?

12 x 125 = 1500
10962 x 0.16 = 1753.92
Total A = 3253.92

10000 * 0.45 = £4500
962 * 0.25 = 240.50
Total B = 4740.50

Total B - Total A = 1486.58

So I can hopefully claim 1486.58 back?

[davek_964]

I'm not sure why the calculation for Total B is what you've put. Why isn't it just 10962 * 0.45?

Anyway - I don't think you would get back the figure you've suggested. The posts above suggest you are able to claim the tax back on the difference, not the difference itself. So you would get back 25 / 40% of it depending on your tax bracket.

[Countdown]

No. You'd claim the tax you have paid on the £1486 back.

If you pay tax at 22% you'll get £326 back. If you pay tax at 40% you'll get £595 back.

[Countdown]

davek_964 said:

I'm not sure why the calculation for Total B is what you've put. Why isn't it just 10962 * 0.45?

There are 2 mileage bands - 45p per mile under 10000 miles. 25p for mileage above this.

[pherlopolus]

wiggy001 said:

NickNJ said:

My current car, 1.8ltr, costs 24p a mile for fuel alone.

Are you sure? My 3.0 BMW Z4 only costs around 20p a mile for fuel on average.

I have to admit I did some sums and worked out that our 21p a mile equates to approx 30mpg (and that was my man maths for working out which car to buy ), so if it's lots of shorter journeys 24p is plausible.

[NickNJ]

The 24p p/mile is for a 1.8t remapped on more expensive 99ron fuel.


Thanks guys, that makes sense now.

[Sheepshanks]

NickNJ said:

Many thanks for the replies.

I'm struggling to find the form I need to fill in to claim? any idea? I can find this...http://www.hmrc.gov.uk/manuals/eimanual/EIM31360.htm

My claim calculations are as follows, think im correct?

12 x 125 = 1500
10962 x 0.16 = 1753.92
Total A = 3253.92

10000 * 0.45 = £4500
962 * 0.25 = 240.50
Total B = 4740.50

Total B - Total A = 1486.58

So I can hopefully claim 1486.58 back?

I'm not sure why you've done it like that - how is the monthly allowance, paid? Normally it's got tax (and NI) taken out of it by your employer so you can disregard it.

Then the calculation would simply be:

10962 x 0.16 = 1753.92

10000 x 0.45 = 4500.00
962 x 0.25 = 240.50
sub-total= 4740.50
less:
10962 x 0.16 = 1753.92
Total: £2716.08

As others have pointed out, you get the tax back on this. At 20% (there hasn't been a 22% band for years) you'd get £543.22 back.

Use form P87: http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.pag...

[Countdown]

OP also gets Essential user allowance which needs to be included in the calc (unless it's taxed at source)

[Sheepshanks]

Countdown said:

OP also gets Essential user allowance which needs to be included in the calc (unless it's taxed at source)

Ah, I thought eua was just some random typo! I did ask how it was paid - if it's termed eua is it normally paid tax-free?

I wonder what sort of employer it is - tax free allowance makes me think it's public sector? For someone doing, say, a couple of K miles per year it wouldn't be too bad, but for 10K/yr that's a pretty crap deal, to say the least.

[Countdown]

Ess user allowances can be paid taxed OR tax free.

However, even if they're initially paid free of tax, if you dont do enough mileage, you get taxed on them afterwards. Your employer has to tell HMRC of certain tax free benefits on P11D notices