Car allowance stress!

peachyprice

wrightyi28 wrote: »

So is the 16p my employer gives me taxable? If not then I would be entitled to £3960 in total from HMRC and employer combined on 20k miles per year?

From employer:
20000 x 16p = £3200

From Taxman:

10000 x 24p = £2400
10000 x 9p = £900
Total = £3300
Taxed x 20% = £760

Total = £3200 + £760 = £3960

Does that sound right? I hope so as a measly £1400 per year wouldnt even cover the fuel!!

No. you only get tax relief on anything above what your employer gives you. You are getting the 16p tax free already, how can you then claim back tax on it?

Right, you are allowed 40p/25p per business mile to run a car, your employer is going to pay 16p per mile to you, tax free. The rest of the 40p you have to pay yourself, you can then claim back the tax on that, so you are getting the full 40/25p tax free. That is what the tax relief is for, it is not for HMRC to pay your running costs.

peachyprice

wrightyi28 wrote: »

From HMRC I will get the 24p difference per mile for upto 10k and 9p per mile hereafter taxed?

Am I correct with what I am saying?

Thank you! :j

No, you will get the tax on the difference.

Any

peachyprice wrote: »

No. you only get tax relief on anything above what your employer gives you. You are getting the 16p tax free already, how can you then claim back tax on it?

Right, you are allowed 40p/25p per business mile to run a car, your employer is going to pay 16p per mile to you, tax free. The rest of the 40p you have to pay yourself, you can then claim back the tax on that, so you are getting the full 40/25p tax free. That is what the tax relief is for, it is not for HMRC to pay your running costs.

Whatever I do I cannot figure out where the £760 came from?

Any

peachyprice wrote: »

No, you will get the tax on the difference.

I think he is just not articulating himself properly... but he is only accounting for 20% he is going to get (though misscalculated as it is £660) - the 20% tax he is going to save.

He is saying Taxed instead of not taxed and therefore saving tax of...

I think.

wrightyi28

The 760 was an error! Sorry.

Just with my employers £3200 alone over 20000 miles will easily cover the fuel.

The golf should do about 50mpg (to play safe ive done this calculation at 40mpg and 1.25 per litre diesel)

This works out at £2841. So taking the car allowance seems like a good deal. Plus if I can get the tax relief on the 40p/25p difference then that would give me a little more!

GRM

Any wrote: »

Whatever I do I cannot figure out where the £760 came from?

It was a typo. The correct figure is £660:

From Taxman:

10000 x 24p = £2400
10000 x 9p = £900
Total = £3300
Taxed x 20% = £660

Any

wrightyi28 wrote: »

The 760 was an error! Sorry.

Just with my employers £3200 alone over 20000 miles will easily cover the fuel.

The golf should do about 50mpg (to play safe ive done this calculation at 40mpg and 1.25 per litre diesel)

This works out at £2841. So taking the car allowance seems like a good deal. Plus if I can get the tax relief on the 40p/25p difference then that would give me a little more!

I always say - if you don't really care what you are driving you can be quits in taking the car allowance instead of a car. It all depends how set you are on the prestige car.

But if you want new car every 3 years and no headache of maintenance etc take the company car.

wrightyi28

Thanks to all for your input!! You should work for HMRC lol!! Why they cant just make it plain and simple is beyond me. One last question.....

When and how do I do these claims?? Im assuming HMRC are not going to remind me to claim tax relief?!

Any

wrightyi28 wrote: »

Thanks to all for your input!! You should work for HMRC lol!! Why they cant just make it plain and simple is beyond me. One last question.....

When and how do I do these claims?? Im assuming HMRC are not going to remind me to claim tax relief?!

No, you are right, they are not.
During the year they are not even aware that you are entitled any relief..
You complete form P87 - expense relief claim form http://www.hmrc.gov.uk/forms/p87.pdf

mjpearson

This thread is very informative, and there are some expert people on here, and I hope one of you will be able to answer this question (which is a variant of the P87 !!!!!! above).

I am handing back company car and taking an allowance instead. This is 6000k per year. But the fuel for the car is all paid by the company. I get a fuel card and put all fuel spending on this, and each month I have to declare the amount of personal miles and this is deducted from my wages (so the taxman doesn't get all slaverinig over the fact that personal fuel is a perc.).

But given that I have no per mile rate, how do I complete the P87 form, and do I even quality for tax relief? No scenario seems to make sense here. If I try and claim the full 40p per mile for the first 10000, and 26 p thereafter will the tax man not just say ' the company bought your fuel so you can't get tax relief ', but then I have no tax contribution to the depreciation of the car (which is considerable when you do 40k business miles a year).

If anyone knows the answer to this, I'd be really grateful...people I work with and are already on this scheme don't know (even though some of them say they get tax relief), and I did ask one accountant friend who didn't know either (even though he pretended he did).