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    • Jonnyed
    • By Jonnyed 12th Aug 17, 4:24 PM
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    Jonnyed
    HMRC Mileage recovery PAYE
    • #1
    • 12th Aug 17, 4:24 PM
    HMRC Mileage recovery PAYE 12th Aug 17 at 4:24 PM
    Apologies if this is answered elsewhere by I have received some conflicting information about the matter. I used to be self employed whereby the cost of my business mileage and cost of running vehicle were offset against the tax I paid and received a good rebate.

    I am now employed on a PAYE basis (site work) so qualify for business mileage recovery at the HMRC rates. I use my own vehicle for work and pay for all fuel. My employer DOES NOT make a contribution towards the cost.

    Let's say I cover 15000 miles a year, in my mind that 10000 @ 45p/mile and 5000 @ 25p/mile = £5750.

    So via self assessment I submit my mileage to recover that amount for business mileage?

    I have seen conflicting information saying that I am only liable to receive 20% of that amount!!!

    Which one is it!? Seriously out of pocket if it's the latter

    Any help welcomed
Page 1
    • Altarf
    • By Altarf 12th Aug 17, 4:34 PM
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    Altarf
    • #2
    • 12th Aug 17, 4:34 PM
    • #2
    • 12th Aug 17, 4:34 PM
    You only get tax relief on what your employer doesn't pay, so it's 20% (unless you are a higher rate taxpayer).

    But seriously, you drive 15,000 miles a year for your employer and they don't pay you anything?

    I hope the basic pay is good.
    • Wayne O Mac
    • By Wayne O Mac 12th Aug 17, 4:48 PM
    • 206 Posts
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    Wayne O Mac
    • #3
    • 12th Aug 17, 4:48 PM
    • #3
    • 12th Aug 17, 4:48 PM
    You get tax relief on the £5750 at your marginal rate, so 20% if you're a basic rate taxpayer, 40% if higher rate.

    From the way you've phrased your post there's a good chance you've overclaimed relief in your self-employed time.
    • Jonnyed
    • By Jonnyed 12th Aug 17, 4:57 PM
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    Jonnyed
    • #4
    • 12th Aug 17, 4:57 PM
    • #4
    • 12th Aug 17, 4:57 PM
    No it's pretty bad.
    • 00ec25
    • By 00ec25 12th Aug 17, 5:02 PM
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    00ec25
    • #5
    • 12th Aug 17, 5:02 PM
    • #5
    • 12th Aug 17, 5:02 PM
    No it's pretty bad.
    Originally posted by Jonnyed
    also bear in mind that "site work" does not necessarily mean that it is qualifying business miles which an employee /PAYE can claim - it may simply be unclaimable commuting.

    There are a few key differences between being an employee and being self employed
    • Jonnyed
    • By Jonnyed 12th Aug 17, 5:06 PM
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    Jonnyed
    • #6
    • 12th Aug 17, 5:06 PM
    • #6
    • 12th Aug 17, 5:06 PM
    One site so far has been 140 mile round trip commute. That was 4 months, this site is 45 mile round trip commute. From the HMRC website, 'temporary places of work' can be up to 2 years duration.
    • Jonnyed
    • By Jonnyed 12th Aug 17, 5:10 PM
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    Jonnyed
    • #7
    • 12th Aug 17, 5:10 PM
    • #7
    • 12th Aug 17, 5:10 PM
    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. 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???
    • Jonnyed
    • By Jonnyed 12th Aug 17, 5:11 PM
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    Jonnyed
    • #8
    • 12th Aug 17, 5:11 PM
    • #8
    • 12th Aug 17, 5:11 PM
    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?
    • Altarf
    • By Altarf 12th Aug 17, 5:22 PM
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    Altarf
    • #9
    • 12th Aug 17, 5:22 PM
    • #9
    • 12th Aug 17, 5:22 PM
    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.
    Originally posted by Jonnyed
    It isn't intended to cover the cost, that is for your employer to do!

    The payments your employer should be making to cover the cost of your business mileage would be tax free. So if you got paid 45p/25p by your employer, you would get nothing from HMRC, but wouldn't pay any tax on those payments.

    If you receive less than 45p/25p HMRC give you the tax relief on the missing part of the payment. What they don't do is make up the payment your employer should have given you.
    • anselld
    • By anselld 12th Aug 17, 5:26 PM
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    anselld
    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?
    Originally posted by Jonnyed
    That is correct, but tax you would only have received tax reduction of 20% of those amounts.

    The tax man doesn't pay the full cost of mileage, only allows it to reduce income *if* it is allowable business mileage. Someone still needs to pay the basic expense (either you or the business).

    In this case the fact that the Business will not pay suggests it is not allowable Business mileage.
    • Dazed and confused
    • By Dazed and confused 12th Aug 17, 5:30 PM
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    Dazed and confused
    HMRC don't actually give you 20% of your claim, they use the expenses when working out what tax you need to pay.

    So if the figures in your op were roughly what you'd be claiming and your basic pay is pretty bad, as you state in another post, you many not get that much back as you have to actually paid that amount of tax to get it back.

    So if you've paid say £800 in tax you could put expenses of a million £ on your tax return but you'd only get £800 back
    • Dovetailcarpenter
    • By Dovetailcarpenter 12th Aug 17, 6:00 PM
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    Dovetailcarpenter
    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 guys
    • anselld
    • By anselld 12th Aug 17, 6:47 PM
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    anselld
    is there an advantage to be had by submitting my self employed work alongside PAYE when it comes to self assessment?
    Originally posted by Dovetailcarpenter
    You have to do that anyway so it is not a choice.


    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?
    Originally posted by Dovetailcarpenter
    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.

    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����
    Originally posted by Dovetailcarpenter
    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.
    • 00ec25
    • By 00ec25 12th Aug 17, 7:09 PM
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    00ec25
    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?
    Originally posted by Jonnyed
    That is correct, errr - unlikely if Op bought a car?
    Originally posted by anselld
    if the vehicle was a car (not a van) then was was expressly wrong as you cannot claim AIA on 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 ??
    Last edited by 00ec25; 12-08-2017 at 7:21 PM.
    • Dovetailcarpenter
    • By Dovetailcarpenter 12th Aug 17, 7:22 PM
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    Dovetailcarpenter
    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?
    • Dovetailcarpenter
    • By Dovetailcarpenter 12th Aug 17, 7:24 PM
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    Dovetailcarpenter
    ^^^ anseeld SEE ABOVE STATEMENT IN BOLD
    • 00ec25
    • By 00ec25 12th Aug 17, 7:40 PM
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    00ec25
    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.
    Originally posted by Jonnyed
    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)

    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)

    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???
    Originally posted by Jonnyed
    "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:

    https://www.accountingweb.co.uk/tax/business-tax/travel-and-subsistence-in-the-building-trade-by-rebecca-benneyworth
    • 00ec25
    • By 00ec25 12th Aug 17, 7:44 PM
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    00ec25
    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?
    Originally posted by Dovetailcarpenter
    please confirm

    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 accountant
    Last edited by 00ec25; 12-08-2017 at 7:46 PM.
    • anselld
    • By anselld 12th Aug 17, 7:52 PM
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    • 4,856 Thanks
    anselld
    Carpenter- van full of tools and materials. So whether commuting or carrying materials, still business use.
    Originally posted by Dovetailcarpenter
    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.
    • Dovetailcarpenter
    • By Dovetailcarpenter 12th Aug 17, 8:15 PM
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    Dovetailcarpenter
    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.
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