Just claimed back over 6 1/2 grand from HMRC in taxed mileage expenses

Lum · 1 May 2010 at 2:57PM

[smug mode]

Some background. I used to use my own car for work and was doing about 40,000 miles per year. After the first year of doing this, keeping mileage records and filling in my tax return (which was an utterly confusing process) I got a nice letter back saying I didn't need to do tax returns any more. I foolishly believed this and stopped keeping records. What the letter should have said was "you don't need to do tax returns, but there's this other form that you need to fill in just for claiming mileage, but we're not going to tell you what it's called or how to obtain it because we're the Inland Revenue and we don't do helpful"

My employer was paying me a fixed car allowance per month and giving me a fuel card and after 5 years I finally noticed that my car allowance was going in as wages, and even more annoyingly, my fuel card bill was going in as a taxable benefit, even though I was doing buisiness mileage. Naturally I was furious, but I had no records to prove any of this other than the total benefit listed on my P60 and the fact that my payslips separated out car allowance from salary.

So I kept mileage records for a 6 week period, divided this by 6 and multiplied by 50 (not 52, two weeks off at christmas) and stated that this was my annual mileage for the last 5 years, then it gets tricky.

The revenue allow you up to 40p per mile tax free for the first 10,000 miles and 25p per mile thereafter. Since I never went below 10,000 miles the sums are a bit easier.

Tax free allowance = £4,000 + (mileage - 10000) * 0.25p

In my case that figure was £11,462.50 for a year, on top of my personal allowance

It turns out that in the later years my company paid out more than that, so the amount I was allowed to claim back was 20% of £11462.50 namely £2292.50

For the earlier years I was paid less than that as petrol was cheaper and my car was more efficient, thus I can claim back 20% of what I was actually paid in car allowance and mileage.

I made up a nice excel spreadsheet containing the entries from my payslips alongside the miles done, followed by a summary column that just has the two P11D figures to double check the information, and just as a final sanity check it contains the average petrol price for that year (from petrolprices.com) and calculates the average MPG of my car, just to ensure that the figures seem reasonable. It gives you the tax free allowance and how much of your car expenditure is actually taxable. This spreadsheet is probably only useful to someone in my exact situation (for one the formulas fail if you did less than 10,000 miles a year) but I'm happy to provide a blank copy if someone will find it useful.

You are also supposed to be able to claim back "mileage allowance relief" if your employer pays you less than the stated rates, but I have no idea how to calculate that or what forms I need to fill in. Frankly I'm glad for what I've got and don't want to rock the boat any further.

The claims process was as slow and bureaucratic as you would expect, though to be fair the people I actually spoke to were pleasant to deal with and tried their best to help. I sent the letter off in late September, got a reply early November saying that it "had been passed to a higher grade officer for review". I then heard nothing until I phoned them in early April asking what was happening only to be told that it had been approved back in November and they didn't know why it hasn't been sent out. I then called two weeks later and they said that my records were in another office so they couldn't check them, then two days ago a letter arrived saying they were going to pay, and today the cheque that you see above.

Now to go pay off one of my credit cards in full, the one that recently jacked up the interest to extortionate levels. After this the only one left is at 5.9% for the life of the balance.

Sorry about the poor quality pic, but I didn't hang around long to ensure I got a good one. Straight to the bank with that.

Kilty_2 · 1 May 2010 at 3:39PM

Nice one

:T:T:T:T

anewman · 1 May 2010 at 4:03PM

This is of course why everything is so bureaucratic. No the Government won't do the right thing and not tax you in the first place, you have to fill in an application form for Working Tax Credits and everything else and they pay some incompetent people to deal with the forms. Must save the Government Billions where people don't realise what they're entitled to or think claiming is too much of an effort. Even after employing the incompetent idiots to sort out the forms etc, still suppose it gives them a job.

Well done for getting what you're entitled to

Lum · 1 May 2010 at 5:08PM

To be fair, it wasn't the Revenue at fault here for the most part.

For 5 years my (former) employer put all my car allowance through as taxable wages and all the fuel I'd used for business purposes through as a benefit in kind, at no point did anyone bother to say "hey, Lum, you know you shouldn't be paying tax on all that?" even when they knew I was financially struggling to the point where I was begging for advances for business trips because I couldn't afford them.

Other than a poorly worded letter and being a bit slow to respond when asked to pay out I don't really have any qualms with what the Revenue did. Sure this issue might have been avoided if their letter was worded better, but it wasn't the Revenue who sat and watch me get screwed for 5 years without saying anything.

That said, I agree with you in principle. The tax system really does need simplifying, rather than trying to patch it up with an ever more complicated system of means tested tax credits that often apply to the kind of people least likely to understand the system.*

I just hope that this post might inspire someone else in my position to think about claiming back their mileage.

*Note: I'm not implying that poor people are stupid, just that the system is incomphehensible to most normal people, unless you're a maths or business expert, an accountant or someone who can afford to employ an accountant, you're probably getting screwed somewhere and don't know it

Gloomendoom · 1 May 2010 at 5:41PM

We had a similar thing at a place where I worked. Because there was some ambiguity over whether the car was a taxable benefit or not, some people were filling in tax returns and paying tax, and some people (including me) didn't, taking the view that, if the rules were clarified, they would pay up if necessary. This situation lasted for ten years until the tax rules changed and the ambiguity disappeared. The IR then declared and amnesty on those that hadn't paid any tax, but refused to refund those that had.

I was well chuffed... I'd saved thousands.

Unfortunately, some of my colleagues were less pleased.

aqueoushumour01 · 1 May 2010 at 7:14PM

Lum wrote: »

[smug mode]

nice one. well done! :T

simonandclare · 31 May 2011 at 10:15PM

This spreadsheet is probably only useful to someone in my exact situation (for one the formulas fail if you did less than 10,000 miles a year) but I'm happy to provide a blank copy if someone will find it useful.

Hi, my husband is in the exact same situation as what you have been through. Having waited nearly 2 months for tax return forms from the Inland Revenue and also having made dozens of phone calls to try and speed things up, only to be met by yes very nice helpful people with promises the forms are on the way, I am writing to ask can we please have a copy of the spreadsheet you put together as this would atleast mean we could submit our claim before hell freezes over!!!!!!!!!!!

Thanks and well done on your victory, an inspiring story :-)

adamc260 · 31 May 2011 at 10:39PM

Lum wrote: »

What the letter should have said was "you don't need to do tax returns, but there's this other form that you need to fill in just for claiming mileage, but we're not going to tell you what it's called or how to obtain it because we're the Inland Revenue and we don't do helpful"

I Lol'd

Sounds just like the DVLA or any other government department

mikey72 · 31 May 2011 at 10:45PM

Excellent.
Now get back onto them for the interest!

Triker · 31 May 2011 at 11:54PM

Fantastic news, well done.

I too get taxed on my mileage and my post is an essential car user one also.

However my tax code has changed over the years and I too have been told I that recieve a 'benefit in kind'...even though my argument is that I'm being taxed twice.
Once at the fuel pump and also on my percieved 'gain' in my income. I'm going to re-look into this...though I find it all very, very confusing.
Well done again.

Lum · 1 June 2011 at 1:03AM

simonandclare wrote: »

Hi, my husband is in the exact same situation as what you have been through. Having waited nearly 2 months for tax return forms from the Inland Revenue and also having made dozens of phone calls to try and speed things up, only to be met by yes very nice helpful people with promises the forms are on the way, I am writing to ask can we please have a copy of the spreadsheet you put together as this would atleast mean we could submit our claim before hell freezes over!!!!!!!!!!!

Thanks and well done on your victory, an inspiring story :-)

Unfortunately, this thread is over a year old and I've since lost that spreadsheet to a dead harddrive, sorry!

Going from memory, it had 3 columns for each month's payslip, base wages, car allowance and any other payments, it then had a column for fuel card transactions. These were added up automatically and I also manually keyed in the values from each year's P11D to ensure that they matched, thus proving that my car allowance and fuel purchases were being taxed as wages. I also put in my mileage for each month.

For each year, I calculated the amount of car-related payments I'd received (car allowance + fuel card purchases). I then calculated how much tax free mileage I had, using the formula 4000 + (mileage - 10000) * 0.25. Note that this formula only works for mileage above 10000 miles.

In cases where the payments received were less than the tax free mileage allowance, I asked for 20% of the payments received. In cases were I'd received more than the tax free mileage allowance, I asked for 20% of the tax free mileage allowance.

I did not calculate the tax relief on years where I'd been underpaid as I couldn't figure out how to do it.

Hope this helps, it was a long time ago now and I'm doing it from memory.

Just claimed back over 6 1/2 grand from HMRC in taxed mileage expenses

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