Mileage Tax Relief

ianuxb

Hi there. I travel with work around the country pretty much on a daily basis. I have just found out that as work do not pay the full government authorised rates for personal mileage that I am entitled to claim a rebate on my tax allowance. I have a couple of specific queries relating to this:

1. My company pay me 20p per mile I travel, but I get this cash in hand. As I haven't received this through my salary, should I have paid tax on it? If so, I expect to hit around about the 10000 business miles this year (equating to roughly a £2000 tax relief) - will this still be the case, or will this be severely cut when they factor in that I received about £2000 from work cash in hand?

2. If I was entitled to the full £2000 tax relief, how much does this work out as in my pocket back from the taxman?

Hopefully it all makes sense.

TM1976

The 20p a mile you get is tax free. You are entitled to up to 40p a mile tax free for the first 10,000 miles and 25p a mile thereafter.

You can claim the tax back on the difference which will be roughly the amount £2,000 x the top rate of tax you paid (20%, or 40% if you are a higher rate tax payer).

roger196

Go to www.hmrc.gov.uk and search on "mileage allowance". Do read carefully what counts as business mileage and what counts as private mileage.

The first 20p will have been paid gross as being under the approved mileage allowance. The amount of further relief will depend on your mileage and cc.
£2,000 further relief will be worth £400 if you are a 20% taxpayer or £800 if you are a higher rate taxpayer( ie valued at your marginal rate of tax). I am not sure what the NIC position is.

ianuxb

Great, thanks for that! It makes sense. I am a lower tax payer, so I'm figuring my 'in-pocket' rebate will come to about £400...great news!

I'm guessing it's best to make this claim once per year, so I figure any time soon after 5 Apr would be the best time?

TM1976

For the current year you won't be able to claim until the tax year is complete (5th April).

If your circumstances were the same you may also be able to claim for the previous 6 tax years.

theculverhouses

Incidentally does anyone know how to make this entry on the HMRC online pages of the tax return. I have mileage allowance paid but not up to the 40p for first 10000 so would like to claim the tax relief on the difference. I am delaying the processing of my online tax return because I don't know how to make this entry!! Any help gratefully received.

Thanks
Tim

pramsay13

I haven't done this for a while so I'm a bit rusty, but I used to claim for using my own vehicle for work. My company paid out 20p per mile, and has been said, we were able to claim up to 40p tax relief.
To do this I filled out a separate form (called P87) which is only 4 pages long and specifically for this purpose so not too daunting.
As an extra bonus - my work (social care organisation) only paid 20p per mile when we had clients in the car, but you can claim tax relief of 40p per mile from your place of employment.
e.g. I travelled 10 miles from base to someone's house. I then travelled 10 miles with them in my car. I would claim 10 miles at 20p - 200p back from my work, but claim tax relief on 20 miles or 800p.
I used to get a cheque for about £500 every year, although at one point HMRC changed my tax code to take this into account, but be wary if circumstances change you will then owe them that much.

John_Pierpoint

I had a similar situation where the employer paid me from my place of work (15 miles away) but in reality I would go in a circle from my home from client to client, so getting them into an efficient order made quite a big difference.