Mileage rates and claiming tax back
Discussion
Afternoon peeps,
I'm after a little advice from any PH accountant types.
Recently I've moved jobs and will be travelling upto 700 miles a week. The company have given me a car payment and I can claim back mileage at 11p per mile.
I've heard a rumour from the chaps at work that you can also claim some tax back from Mr Brown, possibly 40% of the difference between my 11p per mile and the 40p a mile on a different fuel allowance option.
Is this true, and if so how do I go about claiming it back as I've never had the joy of dealing with the TAX man. Do I nede to keep fuel reciepts or a record of my mileage?
Any info would be appreciated!
Cheers!
I'm after a little advice from any PH accountant types.
Recently I've moved jobs and will be travelling upto 700 miles a week. The company have given me a car payment and I can claim back mileage at 11p per mile.
I've heard a rumour from the chaps at work that you can also claim some tax back from Mr Brown, possibly 40% of the difference between my 11p per mile and the 40p a mile on a different fuel allowance option.
Is this true, and if so how do I go about claiming it back as I've never had the joy of dealing with the TAX man. Do I nede to keep fuel reciepts or a record of my mileage?
Any info would be appreciated!
Cheers!
Ah 
- now there is a section on the IR - or rather HMRC - website, or a particular leaflet, on this very point.....
I know - because I've read it before.
But I can't remember where just now........
But try here.... www.hmrc.gov.uk/employers/ebik/ebik3/mileage-payments-04.htm
...for starters!
>> Edited by beano500 on Tuesday 13th September 17:05
- now there is a section on the IR - or rather HMRC - website, or a particular leaflet, on this very point..... I know - because I've read it before. But I can't remember where just now........
But try here.... www.hmrc.gov.uk/employers/ebik/ebik3/mileage-payments-04.htm
...for starters!
>> Edited by beano500 on Tuesday 13th September 17:05
If using your own car, then, for the first 10,000 business miles, you could receive up to 40p per mile from youe employer for your business travel without being charged Income Tax under the Benefit in Kind rules.
After 10,000 business miles, the allowable rate drops to 25p per mile.
If your employer is paying you less than these mileage rates, you can claim the differemce directly from the Inland Revenue as a tax deductable cost.
In your case, you could make a tax claim at 29p per mile up to 10,000 miles and then 14p for mileage over 10,000.
Travel to and from your home and your main place of work does not count as business mileage and cannot be claimed.
After 10,000 business miles, the allowable rate drops to 25p per mile.
If your employer is paying you less than these mileage rates, you can claim the differemce directly from the Inland Revenue as a tax deductable cost.
In your case, you could make a tax claim at 29p per mile up to 10,000 miles and then 14p for mileage over 10,000.
Travel to and from your home and your main place of work does not count as business mileage and cannot be claimed.
Eric,
What about this scenario?
Company pays 11p/mile or similar, so company director then claims the remainder back as a tax deduction (reducing tax bill by a significant proportion in doing so).
Would this fall foul of the "any scheme devised to avoid paying tax" type rule, or attract extra attention from the Inspector?
What about this scenario?
Company pays 11p/mile or similar, so company director then claims the remainder back as a tax deduction (reducing tax bill by a significant proportion in doing so).
Would this fall foul of the "any scheme devised to avoid paying tax" type rule, or attract extra attention from the Inspector?
UpTheIron - that is a perfectly legitimate scenario and exactly the situation in which the claims can be made. It applies to employees as well as directors.
stuartlynn - a company car allowance is just additional salary as far as the Inland Revenue are concerned. It is therefore taxed as salary in the normal way. Therefore, any mileage claims made by the employee can be relieved for tax purposes in the manner described by me above. The asumption being that the additional salary received by the employee is to allow him/her to go out and buy his/her own car.
The main thing to remember about the mileage rates as described above is that they apply to those directors and employees who use THEIR OWN PRIVATELY OWNED CARS. If you use a company supplied car, you will be taxed under the Company Car Benefit in Kind rules and if the company pays for ANY of your private petrol, you will also be taxed under the Benefit In Kind Flat Rate Fuel Scale Charge.
>> Edited by Eric Mc on Wednesday 14th September 08:19
stuartlynn - a company car allowance is just additional salary as far as the Inland Revenue are concerned. It is therefore taxed as salary in the normal way. Therefore, any mileage claims made by the employee can be relieved for tax purposes in the manner described by me above. The asumption being that the additional salary received by the employee is to allow him/her to go out and buy his/her own car.
The main thing to remember about the mileage rates as described above is that they apply to those directors and employees who use THEIR OWN PRIVATELY OWNED CARS. If you use a company supplied car, you will be taxed under the Company Car Benefit in Kind rules and if the company pays for ANY of your private petrol, you will also be taxed under the Benefit In Kind Flat Rate Fuel Scale Charge.
>> Edited by Eric Mc on Wednesday 14th September 08:19
Excellent news, thanks Eric.
In my case I was given one of two options, higher monthly cash allowance for a car and 11p per mile or lower monthly allowance and as you described.. 40p for first 10k, then 25p to 20k and 20p afterwards.
Suppose I just call the Inland Revenue and ask for a form?
In my case I was given one of two options, higher monthly cash allowance for a car and 11p per mile or lower monthly allowance and as you described.. 40p for first 10k, then 25p to 20k and 20p afterwards.
Suppose I just call the Inland Revenue and ask for a form?
beano500 said:
Ah
But I can't remember where just now........
But try here.... www.hmrc.gov.uk/employers/ebik/ebik3/mileage-payments-04.htm
...for starters!
>> Edited by beano500 on Tuesday 13th September 17:05
Cheers beano.. it reads like I expected it to.. a nightmare
Amazing as it may seem, the most straightfowrad way of making claims for tax purposes is by completing and submitting a Self Assessment tax return form. Unfortunately, the Inland Revenue only issues about 9 million tax returns to individuals for completion - even though there well over 20 million tax payers in the UK. As it is, they couldn't really cope with any more than 9 million and they are on a drive at the moment to reduce the number of forms they send out for completion.
The remaining 11 million people have a bit of a problem if a) they need to declare additional income to the Inland Revenue or b) want to make a claim for expenses or other forms of tax relief. This year, the Inland Revenue have introduced a "Short" tax return form in an effort to reduce the Self Assessment burden they created for themselves. You could always phone up your tax office and ask for one of these forms. Alternatively, they might be prepared to accept your claim over the telephone - although from a legal point of view, any communications held with the Inland Revenue over the telephone (or internet or e-mail for that matter) are far from secure from a legal point of view - not to mention the lack of any record or evidence if required at a later date.
Still, the claim is valid and you should go ahead and make it.
The remaining 11 million people have a bit of a problem if a) they need to declare additional income to the Inland Revenue or b) want to make a claim for expenses or other forms of tax relief. This year, the Inland Revenue have introduced a "Short" tax return form in an effort to reduce the Self Assessment burden they created for themselves. You could always phone up your tax office and ask for one of these forms. Alternatively, they might be prepared to accept your claim over the telephone - although from a legal point of view, any communications held with the Inland Revenue over the telephone (or internet or e-mail for that matter) are far from secure from a legal point of view - not to mention the lack of any record or evidence if required at a later date.
Still, the claim is valid and you should go ahead and make it.
As a matter of interest what happens in this scenario.
You use your own private car for business purposes and the car is held on a contract lease where you are responsible for all maintenance and of course the monthly payments. This means you know the exact costs of running your car. You also know the cost of fuel, and the number of miles done.
You can therefore work out an exact cost per mile for your car.
What happens when that cost per mile is in excess of 40p a mile, and in particular if you do more than 10,000 business miles a year and only get the 25 p a mile on those additional miles?
Can you claim the tax back on that additional cost if you can prove the actual cost of running your car?
You use your own private car for business purposes and the car is held on a contract lease where you are responsible for all maintenance and of course the monthly payments. This means you know the exact costs of running your car. You also know the cost of fuel, and the number of miles done.
You can therefore work out an exact cost per mile for your car.
What happens when that cost per mile is in excess of 40p a mile, and in particular if you do more than 10,000 business miles a year and only get the 25 p a mile on those additional miles?
Can you claim the tax back on that additional cost if you can prove the actual cost of running your car?
Eric Mc,
I currently have a diesel comp car and receive 9p per mile expenses. I can have a car allowance instead of comp car but still only claim 9p (if I buy diesel). Reading your post above you suggest I can claim back the difference between 9p and 40p/25p from the IR.
I do 30,000 miles per annum so this would equate to claiming back £4,900. So if I took the car allowance option I could claim this money back from the IR?
What I really want is 40p per mile and no car allowance/comp car. My employer have said they wont do this option - any reason why?
Many thanks
I currently have a diesel comp car and receive 9p per mile expenses. I can have a car allowance instead of comp car but still only claim 9p (if I buy diesel). Reading your post above you suggest I can claim back the difference between 9p and 40p/25p from the IR.
I do 30,000 miles per annum so this would equate to claiming back £4,900. So if I took the car allowance option I could claim this money back from the IR?
What I really want is 40p per mile and no car allowance/comp car. My employer have said they wont do this option - any reason why?
Many thanks
Sorry for not replying. The thread slipped my mind after my last response.
I wouldn't have a clue why your employer choses to do what they intend to do. The only way to find out their thinking is to ask them. Maybe they feel that paying staff members 40p per mile to use their own personal cars is too much.
As it is, because you are receiving a car allowance, I must presume that the car you are using is technically "your" car and not the company's. If your employer is only willing to pay you 9p per mile, that is obviuously an economic decision on their part. As I said earlier, you can make a claim from the tax man for the missing 31p per mile up to 10,000 miles and 16p per mile on the excess. Don't forget, that the tax man will not be refunding you £4,900 or anything like it. The reduction n your tax liability for the year is the value of your mileage claim multiplied by whatever rate of tax you pay i.e 22% or 40% depending on your overall salary.
I wouldn't have a clue why your employer choses to do what they intend to do. The only way to find out their thinking is to ask them. Maybe they feel that paying staff members 40p per mile to use their own personal cars is too much.
As it is, because you are receiving a car allowance, I must presume that the car you are using is technically "your" car and not the company's. If your employer is only willing to pay you 9p per mile, that is obviuously an economic decision on their part. As I said earlier, you can make a claim from the tax man for the missing 31p per mile up to 10,000 miles and 16p per mile on the excess. Don't forget, that the tax man will not be refunding you £4,900 or anything like it. The reduction n your tax liability for the year is the value of your mileage claim multiplied by whatever rate of tax you pay i.e 22% or 40% depending on your overall salary.
I have successfully claimed back the 'difference' between what I am paid/mile and the IR rates 40p/25p for several years. I too receive a car allowance but this is classed as 'salary' and taxed in the normal way.
You used to be able to claim back the difference in 'actual' costs of running your car 'the actual method' but this was withdrawn to be replaced by the 'simple method' only i.e. difference between what your employee pays you and the IR rates.
I just kept records of business mileage and submitted the 'difference' figure in one of the expenses boxes on my tax return (1.26 IIRC)e.g. if you do 20,000 business miles you are entitled to 10,000 x 40p plus 10,000 x 25p = £ 6500, less 20,000 x 11p (or whatever you are paid) = £ 2200. Difference = £ 4300 hence rebate of 40% of £ 4300 = £ 1720.
Look forward to a cheque every year.......
Darren
You used to be able to claim back the difference in 'actual' costs of running your car 'the actual method' but this was withdrawn to be replaced by the 'simple method' only i.e. difference between what your employee pays you and the IR rates.
I just kept records of business mileage and submitted the 'difference' figure in one of the expenses boxes on my tax return (1.26 IIRC)e.g. if you do 20,000 business miles you are entitled to 10,000 x 40p plus 10,000 x 25p = £ 6500, less 20,000 x 11p (or whatever you are paid) = £ 2200. Difference = £ 4300 hence rebate of 40% of £ 4300 = £ 1720.
Look forward to a cheque every year.......
Darren
Gassing Station | Business | Top of Page | What's New | My Stuff