Tax - Car Allowance Confusion

WageSlave_3

Afternoon all!

I am hoping someone might be able to advise / clarify some confusion which has arisen whilst doing my self assessment return today. The part which I am trying to get my head around is for the use of my private car for business travel.

Firstly, I don't get paid the full 40p per mile allowed for travel below 10000 miles per year. Following the notes available on the revenue site, I worked out the difference between the total amount I am allowed to claim minus the amount actually paid to me. This comes to 1250.00 (1775 - 525 paid). I have entered this in box 17 as directed. I have then entered the total taxed interest from bank accounts and savings as well as all my other information but the final calculation shows I am only owed 125 which just doesn't stack up.

So I went back and removed the car allowance amount altogether leaving just the interest paid on savings. The amount now owed - 325 - works out fine as I worked out roughly what the difference would be and I am happy it's correct.

By my calculations, if I would owe 325 on the portion of interest not taxed at higher rate when I exclude the 1250 for using my car, then why is the amount owed to me not somewhere around 925, not 125, if I include both figures? Have I missed something fundamental or is there something I don't know about such the 40p per mile allowed when you use your own vehicle?

Thanks in advance for any light you might be able to shed on this!

WS

PS: Will keep trying the revenue helpline. So far, not joy getting through to them!

jennifernil

You don't get the 40p - what you were paid, only the tax relief on it.

WageSlave_3

Jennifernil,

Thanks. A couple of questions, then;

Does that mean I will, in effect, pay less tax in the next tax year to the equivalent of the amount I thought I'd get back?

Do I have to register for it or take no action?

Is there any way to request payment of the full amount rather than tax relief? I'd rather have it back in one lump sum rather than get it back in minor amounts each month over the next year!

WS

jennifernil

If you are due a repayment, there is a box to tick to say you want it refunded rather than done via your coding.

They may well adjust your code number if this is a regular expense. That way there will be little or no refund or shortfall, but you need to check the figures every year. They may also alter it to take in the bank interest.

No registering, just do your SA every year.

I don't think you quite understand though.........

You are entitled to receive the 40ppm tax free, so that is the £1775 you mention. The fact your employer has only paid you £525 (presumably tax free) is a matter between you and your employer, some employers are just stingy.

You cannot expect HMRC (which really means all the other taxpayers) to pay you the difference between the £1775 and the £525, but you can claim the amount you did not get paid as an "expense against earnings", which means that you get to have the difference of £1250 tax free.

You don't get the missing £1250, you just don't pay tax on £1250 of your salary.