Contract change, TUPE and expenses

[Joe5y]

Hi all,

I’m currently going through a TUPE contract change owing to an acquisition where it has come to light my expenses claim will change.

I am an Area Manager and cover the south of England covering c20,000miles a year with my closest branch (a few miles from my house) being my only place of work.

My car allowance is currently £4,500.00 and this rises to £6,000.00 with the new contract, no terms attached to allowance. However the rate at which I claim for changes considerably from 40p per mile as per current contract to 11p (depending on my car).

Can I ask some advice on tax relief, break points (10,000miles etc), TUPE law and ultimately why, after all my calculations, it looks like I’ll be highly out of pocket.

See below for the calculations;



For someone (me) struggling to understand, what am I missing and how do I not become out of pocket?

[Lee540]

I think if I understand..

You claim the difference up to 45p/mile directly from HMRC with your self assessment/P87 (depending on amount of claim)

I am getting 12p from my company and I claim the difference at the end of the financial year.

[Dan_1981]

You can claim relief back on the difference from the government - either via your self assessment or a P87 form.

Allows you to claim tax relief on the difference between what the employer pays you and what the HMRC recognised rate is...

May help

[MustangGT]

Also bear in mind you may have owed the tax man at your current rate.

HMRC allows 10,000 miles at 45ppm and then only 25ppm. This is per tax year.

Therefore, if you are doing 20k miles per year it is 10k at 45p, 10k at 25p = £7,000.

If you receive 11ppm = £2200 then you can offset the £4,800 against your taxable income. The actual amount will depend on your marginal tax rate.

Currently you receive £8,000 for 20k miles, therefore this should increase your taxable pay by the £1,000.

Hope this helps.

[Marcellus]

Aside from the tax you’ve owed have you also got your £0.16 per mile as your costs correct or is that purely your fuel costs?

I’d be surprised if £0.16 covered fuel, insurance, maintenance, depreciation, finance etc.

[martinbiz]

Op have you actually queried with your employer as to why they have reduced the mileage payment by such a huge amount or have you accepted and signed the new contract. I think I would be expressing my displeasure to put it mildly if it was me

[surveyor]

martinbiz said:

Op have you actually queried with your employer as to why they have reduced the mileage payment by such a huge amount or have you accepted and signed the new contract. I think I would be expressing my displeasure to put it mildly if it was me

I’m sure there reply will be it’s as they pay a car allowance and are funding the cost of the car via that.

Our place is the same. And it’s partly why I have a company vehicle.

[martinbiz]

surveyor said:

I’m sure there reply will be it’s as they pay a car allowance and are funding the cost of the car via that.

Our place is the same. And it’s partly why I have a company vehicle.

Yes agreed but does seem a huge drop, I was paid a car allowance when I gave up having a fully expensed co car years ago as the tax was getting more ridiculous as each year passed, used to only do about 5k but I was still paid the full mileage allowance, think it was 40p back then

[meatballs]

A payment we could provide to employees, tax free, that directly compensates them for the wear and tear on their car and partially may make up some of the disruption of making them travel around the country to deliver work for us?

That's a big no from the finance team, working from home. :P

[Sheepshanks]

MustangGT said:

Also bear in mind you may have owed the tax man at your current rate.

HMRC allows 10,000 miles at 45ppm and then only 25ppm. This is per tax year.

Therefore, if you are doing 20k miles per year it is 10k at 45p, 10k at 25p = £7,000.

If you receive 11ppm = £2200 then you can offset the £4,800 against your taxable income. The actual amount will depend on your marginal tax rate.

Currently you receive £8,000 for 20k miles, therefore this should increase your taxable pay by the £1,000.

Hope this helps.

This is how I see it too,

Assuming OP is a 40% tax payer, he should have been paying £400 tax on his 40p allowance.

On the new 11p rate he'll be due £1920 back in tax, plus he's £900 better off with the increased allowance. So another £2850 (14p per mile).

[AliMc99]

Assuming 40% tax rate the OP will be worse off by £1140 p.a (taking in to account that only the 1st 10k miles are tax free up to 45p mile- thereafter the tax free element of the mileage allowance is capped at 25p (and therefore pays tax on the difference above that)

[AliMc99]

Slight correction- he'll be worse off by £1340 as he can claim £200 of tax relief on his 1st 10k miles on his old contract

[jwo]

Do you work for a waste company?

Under previous set up you shouldn’t have been paid 45ppm as in receipt of company car allowance and not taxed on the difference between advisory fuel rate and 45p…

So you may have been better off but in eyes of tax man you haven’t declared correctly. Best to accept the AMR new company pays you and the increase in car allowance.. TUPE won’t cover you on this one..

[martinbiz]

Are you sure about that, whichever way you look at it it’s just extra salary which you have paid tax on, you can dress it up how you like but thats all it is, the main reason it is kept separate is so it doesn’t figure any DB pension calculations. Had about 5 or so years of being paid the full allowance after I gave up my car and was shown on my SA and never had anything from HMRC saying it was a liability and I owed them. In fact for a couple of years I was getting 60p due to doing a lot of trailer towing