Car allowance and mileage allowance

angusdd9

Hi,

I have a query here that I am hoping someone can help me with. When I joined my employer about 5 years ago I was given a car allowance on top of my salary. I use my car for business miles, and initially my employer paid me £0.40 per mile for mileage. However, soon after this they stopped doing this saying that they had made a mistake and that mileage should only have been paid at £0.10 per mile because I am getting a car allowance and the higher mileage is only payable if I am paying for a car myself. At the time, I just accepted this, even though I was a bit annoyed with it.
However, I have been looking into this recently, and am more and more convinced that i should be getting the full £0.40 per mile for any business mileage that I do.
If anyone can confirm this, or point me in the direction of any relevant authority on the matter so that I can approach my employer regarding this I would be very grateful. I do not wish to raise the matter without having my facts right.

Thanks and regards,
Angus Duncan

Road_Hog

As far as I know they can pay you what they like for mileage. However they're right in that effectively you have a company car which is funded through an allowance. the higher rate is for people using their own car and the maintenance/depreciation costs - you are being paid that part directly in your allowance.

However, 10p doesn't cut it anymore and you should be explaining that fuel is 50% more than it was 5 years ago and these needs to be increase to at least 15p to cover your costs.

Also, I believe you are able to claim a tax allowance on the difference between what the Treasury allows (40p) and what you are paid for the first 10,000 miles and then the difference (25p) for any miles over this.

angusdd9

Hi,

Thanks for your reply. I now see that I can claim the difference from HMRC by downloading form P87 from their website.

Thanks,
Angus

Road_Hog

angusdd9 wrote: »

Hi,

Thanks for your reply. I now see that I can claim the difference from HMRC by downloading form P87 from their website.

Thanks,
Angus

You can claim the difference in tax relief, not the whole difference.

e.g. you do 10,000 pa. you claim 10p, so £1,000.

Treasury allows you 10,000 at 40p, so £4,000.

£3,000 difference, if you're a basic rate tax payer, £3,000 @ 22% = £660 rebate each year. 40% if higher rate tax payer, 25p calculation rate after the first 10,000 miles pa.

Edit: You can back claim for 6 years.

JonathanA

I think you could check this with the Revenue. A while ago, I opted for a cash allowance rather than a company car, and on checking with the revenue, because the car was owned and run by me, I could claim 40 per mile for business miles. The car allowance is subject to tax and ni of course.

It is your employer's choice regarding the level of payment they make to reimburse mileage and as has rightly been said, you can claim back the rebate. But to say it is because of your car allowance that they are reducing the amount is, I think, possibly wrong!

Road_Hog

JonathanA wrote: »

I think you could check this with the Revenue. A while ago, I opted for a cash allowance rather than a company car, and on checking with the revenue, because the car was owned and run by me, I could claim 40 per mile for business miles. The car allowance is subject to tax and ni of course.

It is your employer's choice regarding the level of payment they make to reimburse mileage and as has rightly been said, you can claim back the rebate. But to say it is because of your car allowance that they are reducing the amount is, I think, possibly wrong!

I think you should read what has already been said and stop repeating the answers.