Car Allowance & Mileage Allowance - Tax question

noodle944

Hi All,
Apologies, I know that this is a well worn subject, but I think that I am not getting the best deal from my employer (which is a Ltd Company).
I brought and use my own car and currently I receive a monthly allowance of £375 in my salary (which I guess I am taxed on) and can claim £0.10p per mile on monthly expenses.
I am struggling to understand how to ensure that I am making the most of the tax relief available.
I expect to travel in the region of 15k miles per year.
Any help/advice would be really helpful!
Best regards.

Any

Yes, you are taxed on your car allowance..

The 10p per mile I suppose is for fuel. I also suppose that is only for BUSINESS mileage?

I believe, that you can get 40p per mile for the first 10000 miles and then 25p for the miles thereafter - for Business mileage.

You can claim tax relief on this difference by completing form P87.

http://www.hmrc.gov.uk/forms/p87.pdf

TM1976

You don't have any choice on how to make use of the tax relief available, it's just based on the rate and the miles. You do get a fixed amount though so if you keep your actual motoring costs (eg petrol, insurance, servicing) down you will make the most of the tax free amount.

There is a calculator on the link : http://www.expensestaxrebate.co.uk/

noodle944

Yes, the £0.10p is to cover the fuel costs and is for business miles.

What are the implications if I get my employer to pay for fuel and maintain a mileage capture? I don't do many personal miles in the car. Would this be a better option? I am not looking to necessarily make money out of this but just don't want it to be costing me for fuel, which it is at the moment.

Any

noodle944 wrote: »

Yes, the £0.10p is to cover the fuel costs and is for business miles.

What are the implications if I get my employer to pay for fuel and maintain a mileage capture? I don't do many personal miles in the car. Would this be a better option? I am not looking to necessarily make money out of this but just don't want it to be costing me for fuel, which it is at the moment.

You do NO personal miles what so ever?
You don't go to work in it? Or is your home an office according to your contract of employment?

You don't ever go to shop? Or to doctors?

You could get a fuel card from your employer and still keep milage diary and declare any personal miles to your payroll department so then they can deduct the personal mileage from your payroll.

Or not and then your employer will declare all the fuel you have used on P11D and then you will have to prove to HMRC that all the miles were business miles

Sarny

I'm going to jump on this bandwagon - ive just started my own business, not making a profit at the moment (dont think i will be for a while) and i have a question regarding the car.

I just am using my own car for some home visits, say its 50miles there 50 back thats 100 total. Can i claim 40p a mile, so £40?

Does that mean i get a total £40 tax rebate from HMRC (as im working 9-5 too) or will i only get 22% (my tax bracket) of £40, eg £8.80 rebate back?

Thanks

TM1976

Any arrangement where your employer pays for fuel directly is going to be financially punitive as you are taxed at the same rate whether you pay for some of your own fuel or not.

The only tax efficient way to get recompense is to get your employer to pay a high per mile rate or pay you a higher car allowance.

Sarny - you only get the tax back, 40p per mile is the cost that HMRC deem you incur from using your own car.

Sarny

So thats £8.80 for me yeah?

TM1976

Depends on your business - Ltd Co or sole trader, how you pay yourself etc.

But yes £8.80. It's just tax relief on a business expenses like any other business expense. HMR&C doesn't pay for anyone's petrol.

Dalmore

sorry for jumping in here but i wondered if someone could clarify for me as i have a company car (leased) i get 10ppm for business use, can i apply for tax relief on fuel costs for business miles?

Davef68

Dalmore wrote: »

sorry for jumping in here but i wondered if someone could clarify for me as i have a company car (leased) i get 10ppm for business use, can i apply for tax relief on fuel costs for business miles?

Not if you have a Co Car - the P87 claim is for people who use their own car for work (and takes into account wear and tear costs etc)