Cash for car allowance.

proudscot2k

Hi i was wondering if anyone can give me some advice here. Basically i get a cash for car allowance, which is to the value of £360 per month, this is to pay for the car,tax,insurance and upkeep. I assume that when i purchased the car i paid tax on the car, i am now getting taxed on the cash for car allowance so am i paying double tax for one vehicle and is there any relief from this. I got on to the tax office but the gentleman was not much help at all, the only thing he said was i could possibly fill in a P87 to claim back mileage expenses. The gvnmt rate is 40ppm, my company paid me on average 12ppm. On doing the sums last year i done:
8043 miles @ gvnt rate = 3217.2
8043@ companys rate = 913.60
so i reckon i can claim 2303.6 back

Can anyone give me any advice. Thanks in advance

fengirl_2

The advice you got from the tax office is correct.
The monthly round sum car allowance is taxable, but you can reclaim tax relief based on the business miles you cover, less the amount reimbursed by your employer. The rate is 40p pm for the first 10,000 miles and 25p pm thereafter. the form P87 is indeed the correct form, although if you set yur claim out neatly on a piece of paper, they will accept this. Your calculation looks correct, but remember, this is tax relief so you only get £2307 at your highest rate of tax.

Jamesyg27

Rather then create a new thread, and seemed easier to post here.

I will be claiming 17,000 miles from the government, 10k at 19p 7k at 4p (Work pay me 21p a mile)

My 08/09 tax bracket is 40%, but my 09/10 tax bracket will be 22% because of the move in the scale from £34,800 to £37,400.

I take it I can claim this mileage back at the 40% I have been paying, and not the 22% that it will be?

Thanks all,

James