Mileage vs car allowance - HMRC point of view?

[bleesh]

Having some discussions at work about what both of these allowance cover.
I am specifcally looking for the HMRC point of view, rather than what the company think, as I believe the HMRC point of view relates more to my tax return that what my company "thinks".

My understanding is
Mileage allowance - to cover costs/expenses incurred in using our
own cars for business, petrol, depreciation, tax, insurance, maintenance etc.
Car allowance - to cover funding of the car purchase and once the car has
been paid for to build up deposit for next car.


Company's understanding
mileage allowance - just for petrol
car allowance - to cover everything else.

This CAN'T be right, because
a) when I used the "exact" method of calculating expenses, I was able to claim for petrol, depreciation, tax, insurance, maintenance etc.
b) we all get the same car allowance, but do different mileages
c) I'm taxed at highest marginal rate on my car allowance, whereas the mileage allowance is a tax-free allowance.

We get 20p per mile so I know that we are able to claim relief on the "missing" 20p (up to the HMRC AMAP for the first 10,000 miles) in our tax returns.

I've trawled the HMRC website but cannot find the definitions I am looking for.

TIA for any help,

Steve

[bleesh]

Thanks for the replies so far people - Neil especially, as that was EXACTLY what I was looking for

Cheers!

Any further comments and offerings welcome though,

Steve

[bleesh]

Coming back to this one again - whilst I await a call back from the Tax Office - PH will probvably be quicker ;-)

HMR&C booklet 480 Expenses and Benefits page Chapter 16 page 35 16.3 gives a list of items that the mileage allowance is to cover
"fuel,servicing, tyres, road fund licence, insurance and depreciation), plus interest on any loan to buy the vehicle".

Is this what the allowance has to LEGALLY cover, or is it more of a suggestion?

What if the company says that their MILEAGE ALLOWANCE is only to cover fuel costs, as the employess are paid a "CAR ALLOWANCE" that will cover the other items on the list apart from fuel.
(This is where the car allowance is in effect treated and taxed as extra salary, and from HMRC point of view is not, I guess, even related to a car).

Is this an "issue" for HMRC, or just in my mind???

To my mind this is wrong, as the mileage rate we get is 20p per mile, and so can claim back TAX on the "missing" 20p compared to the AMAP - by indicating that the car allowance is to pay for this, surely I'm being stitched up as this is money that has been taxed that I can't claim back the tax on.....????

The race is on PH v HMRC - who do YOU think will win???

Cheers,

Steve

[bleesh]

Havoc, thanks for the reply. You were right - PH is way faster than the tax office

I'm comfortable with the "car allowance" bit just being extra salary, and taxed as such.

The real question is can the employer "get away" with paying a mileage allowance based on them saying it is JUST for petrol and the other associated "costs" (insurance, servicing, depreaciation, load interest etc) are to be paid for from the car allowance?
Obviously if they are olny considering PETROL costs then this will give a lower amount than if they consider the other items on the list.

Is that list that HMRC give the LAW or is it just a SUGGESTION??

I know there's a question in there somewhere but just having trouble articulating it, I think!

Also interested in that other bit about claiming legs 2 and 3 of your example :-) and will give the tax office a bash at that one as well - if they come back to me.

Steve