Mileage Allowance Relief for an employee

Ingah · 13 February 2016 at 4:20PM

My employer doesn't pay the full mileage allowance for using my private car on company business (both not the full rate of pence per mile, which I believe is 45p, or the full journey mileage) and I have found out that I can claim tax relief on the differences (I'm not allowed to link, but i've read the "Tax Relief for employees" page on the gov.uk website). I'd be looking at claiming by filling in a P87 form.

Would I be right in assuming that for each penny I am paid under the allowances, I should receive a penny rebate/deducted from my tax if I do this right? Or is it only a portion of that? I'm hoping someone has been through this before and can advise me what to expect!

If it makes any difference: I do not have any additional incomes outside of my job.

Darksparkle · 13 February 2016 at 4:42PM

45p is for the first 10,000 miles, it's 25p thereafter.

You calculate the expenses first.

So for example you do 1000 miles a year and your employer pays you 20p a mile.

So you have expenses of 1000 x (45p-20p) = £250.

You'll then get tax relief at your rate of tax so if basic rate £250 x 20% = £50

Caz3121 · 13 February 2016 at 8:18PM

Ingah wrote: »

or the full journey mileage

what do you mean by this?
Normal commute from home to normal place of work is not an allowable expense. Do they deduct this figure from your reimbursement?
e.g. home to office 5 miles
office to other business location 20 miles - reimbursed
home to business location - 25 miles. Travelling there without going to office first they only pay the 20 which is the distance from the office?

Ingah · 14 February 2016 at 8:41PM

Caz3121 wrote: »

what do you mean by this?
Normal commute from home to normal place of work is not an allowable expense. Do they deduct this figure from your reimbursement?
e.g. home to office 5 miles
office to other business location 20 miles - reimbursed
home to business location - 25 miles. Travelling there without going to office first they only pay the 20 which is the distance from the office?

Close but not quite, they actually deduct the return journey mileage of your standard return commute to the office from ALL mileage claims irrespective of journey direction or distance between the office and other business location. Hence the shortfall.

@Darksparkle: Thank you, i've realised from what you've said that my first assumption was incorrect, it'll be a % (i.e. your income tax %) of the shortfall that is rebated by HMRC, although if I remember correctly i've read that i'm to declare the full shortfall to receive this percentage of it back.

Darksparkle · 14 February 2016 at 10:27PM

Ingah wrote: »

Close but not quite, they actually deduct the return journey mileage of your standard return commute to the office from ALL mileage claims irrespective of journey direction or distance between the office and other business location. Hence the shortfall.

@Darksparkle: Thank you, i've realised from what you've said that my first assumption was incorrect, it'll be a % (i.e. your income tax %) of the shortfall that is rebated by HMRC, although if I remember correctly i've read that i'm to declare the full shortfall to receive this percentage of it back.

You declare the expenses, they'll work out the tax.

redpete · 14 February 2016 at 11:12PM

I've just filled in a P87 form. You enter the information online. You put in the number of claimable miles you travelled over the year, the form works out how much you could claim for this (i.e. the 45p/25p per mile), you then enter the amount of money the company reimbursed for these journeys in total and the form works out the difference. You then print out the form and post it to HMRC. They will then work out how much the refund should be and pay it into your account or send you a cheque..

Mileage Allowance Relief for an employee

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