HMRC Mileage recovery PAYE
Comments
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This is the original poster as I've now been locked out to post temporarily.
So I seem to have got my wires crossed about the benefits of using your own vehicle for work without contributions from employer.
They offered a battered old van as a 'company car' which obviously has repocussions such as tax as its benefit in kind.
I am still registered self employed as I still need to bolster my low wage (new to management) with what I know best (carpentry) evenings and weekends.
So my question is, if my employer (daytime) has no input towards costs of vehicle, some do offer allowances insteAd of company cars nowadays (this one is bargain basement) is there an advantage to be had by submitting my self employed work alongside PAYE when it comes to self assessment? FOR THOSE OF YOU THAT SAY YOU SHOULD ALWAYS DO THIS, FOR THE RECORD IVE ONLY BEEN IN THE NEW JOB SINCE THE START OF THE TAX YEAR SO HAVENT GOT TO THAT POINT YET! 😬
Say for instance I do 2 jobs a month to bring in 500-800 quid alongside my day job, I know that bumps my tax liability up, but the benefit of running part of the cost of the vehicle through my own business may have a positive effect when it comes to end of tax year?
Sorry if this sounds amateurish, but I've always been self employed and had a good accountant doing my returns, so stupidly assumed the 45p mile from HMRC worked the same for PAYE to reduce your tax liability👍🏻
Much appreciated guys0 -
You have to do that anyway so it is not a choice.Dovetailcarpenter wrote: »is there an advantage to be had by submitting my self employed work alongside PAYE when it comes to self assessment?Dovetailcarpenter wrote: »Say for instance I do 2 jobs a month to bring in 500-800 quid alongside my day job, I know that bumps my tax liability up, but the benefit of running part of the cost of the vehicle through my own business may have a positive effect when it comes to end of tax year?
You can only legitimately run the proportion of the vehicle costs that relate to the SE work through the SE business. You cannot subsidise your PAYE employment.Dovetailcarpenter wrote: »I've always been self employed and had a good accountant doing my returns, so stupidly assumed the 45p mile from HMRC worked the same for PAYE to reduce your tax liability����
It does work the same as far as tax is concerned. It is just that in Self Employment "the person" and "the business" are one-and-the-same. In PAYE you no longer control "the business" part.
The first thing to establish beyond a doubt is if this mileage is allowable business expense or if it is just commuting. If it is the latter then no amount of creative accounting is going to help.0 -
The cost of the vehicle was claimed for under the annual investment allowance (capital) and the business mileage was done on receipts only. Is this incorrect?
if the vehicle was a car (not a van) then was was expressly wrong as you cannot claim AIA on a carThat is correct, errr - unlikely if Op bought a car?
you can claim writing down allowance at the relevant % depending on co2 emissions and date of purchase. If it was a car with a co2 > 130g/km you can only claim 8% per year writing down allowance. If lower than 130g/km the rate is 18%
https://www.gov.uk/capital-allowances/business-cars
since you then appear to have claimed the full (?) cost of the fuel receipts please explain how they were related to business use only. Did you have an accountant for your self employed accounts? They appear to be wrong because if you claimed the full cost of the fuel some of it must still have been in the tank when you did private mileage, so you are required to adjust your claim for private use - did you?
EDIT - I see you do have an accountant. It is perhaps the case he has done your SE correctly but not explained it to you in full ??0 -
Carpenter- van full of tools and materials. So whether commuting or carrying materials, still business use. I don't tend to run round in a long wheel base transit on the weekends. Got 2 wheels that are much nicer.
I understand that I would have to prove the proportion of the vehicle usage for each. But here's devils advocate:
Let's say the cost of the vehicle is £3500P/annum to lease finance, say £500 insurance, £250 tax, forget about the fuel costs associated with each element for now.
If I earn £28000 as a new site manager and commute 200 miles a week using said vehicle, and I work self employed weekends etc using same vehicle, (circa £5000-8000 per/annum) can the writing down costs or annual investment allowance for the capital cost of the vehicle be associated with the self employed business to bring down tax liability?0 -
^^^ anseeld SEE ABOVE STATEMENT IN BOLD0
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the taxpayer is not in the business of handing you sums of money to pay your travel costs. The taxpayer will however, as a concession, allow you to claim back the tax you have paid on the value equivalent to the expenses you incurred. For that purpose the taxpayer sets the rate at 45ppm (25ppm after 10k)From what I can gather, and I know some people this applies to on a PAYE basis, if the employer chooses to reimburse at the full rate, that is received on top of pay (untaxed). I don't understand then how the expense incurred travelling to the temporary place of work can only be 20% of the value. I.e 9 pence per mile reimbursed. This doesn't even cover the cost of the fuel let alone wear and tear on the use of your own vehicle for business.
if the employer does not pay you any mileage allowance then all you get back is 45ppm x tax rate (eg 20%) = 9ppm. (Assuming it is business travel and not commuting)
"site based" in the context of construction industry means different things in different circumstances. The 24 month rule is not the key driver, it very much more depends on what it says in your contract of employment as to where your "base" is. I suggest you check with your accountant. This is a bit too simplified but gives a hint at the issue - section on site based employee:I am a site manager for a SME and carry some things to and from site (short term) so as well as commuting it is also business use...... no???
https://www.accountingweb.co.uk/tax/business-tax/travel-and-subsistence-in-the-building-trade-by-rebecca-benneyworth0 -
please confirmDovetailcarpenter wrote: »Carpenter- van full of tools and materials. So whether commuting or carrying materials, still business use. I don't tend to run round in a long wheel base transit on the weekends. Got 2 wheels that are much nicer.
I understand that I would have to prove the proportion of the vehicle usage for each. But here's devils advocate:
Let's say the cost of the vehicle is £3500P/annum to lease finance, say £500 insurance, £250 tax, forget about the fuel costs associated with each element for now.
If I earn £28000 as a new site manager and commute 200 miles a week using said vehicle, and I work self employed weekends etc using same vehicle, (circa £5000-8000 per/annum) can the writing down costs or annual investment allowance for the capital cost of the vehicle be associated with the self employed business to bring down tax liability?
the vehicle you have used to date for the self employed business is a VAN?
if that is true then you can claim AIA and so the cost of the purchase of the vehicle is claimed in full in the year of purchase for your self employed accounts.
If you lease rather than buy then the position is different - ask your accountant0 -
Dovetailcarpenter wrote: »Carpenter- van full of tools and materials. So whether commuting or carrying materials, still business use.
Commuting to and from employment is not business use as far as HMRC is concerned. What is in the van at the time is not relevant.0 -
Listen, I appreciate your input up to this point. Around 10 posts on any forum is where I tend to see people get on their pedestal about things. If I leave my house in the morning, and go to pick up materials to take to the job site, that is business use. Whichever way you look at it. If I were driving just myself to work where I sat working then it would be a commute. Thank you to all that have given me a clearer insight into the matter.0
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Not contracted to one specific site, can be anywhere within 52 mile radius of head office. Think something can be done regards mileage allowance from the employer as they would have to fuel the company vehicle anyhow.
Thanks Ooec25 👍🏻👍🏻👍🏻0
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