Tax for business mileage

Nicknack_2

hi,
i called hmrc this morning, and one thing i forgot to ask about this was if it makes any difference if my employer gives me a contribution for using my own vehicle. Reading the hmrc article, I don't think it makes any difference, but; would i be correct in saying:
My employer adds £100 to my monthly wages and pays 20 pence per business mile. Am i still entitled to claim the other 20 pence from hmrc via self assement (up to 10K miles and then 5 pence after this) when they are giving me £100 to use my car?
I think (and hope!) yes. I have tried calling hmrc this evening although they are receiving a high amount of calls at the moment.
Thanks for looking!

MrRedundant

The £100 is a car allowance and should be taxed in full via PAYE

Your 20p a mile should be tax free and you can claim relief for the balance.

Nicknack_2

MrRedundant wrote: »

The £100 is a car allowance and should be taxed in full via PAYE

Your 20p a mile should be tax free and you can claim relief for the balance.

Hi there,

Many thanks for your prompt reply. Excellent!

So i should be looking at an itemised wage slip which states the amount of mileage @ the rate; not one sum which includes wages, allowance and fuel with gross and net?!

CLAPTON

remember you don't claim the other 20p from the HMRC; you claim an alloowance for the 20p which reduces you tax by 20p x 20%

Nicknack_2

CLAPTON wrote: »

remember you don't claim the other 20p from the HMRC; you claim an alloowance for the 20p which reduces you tax by 20p x 20%

hi there,

many thanks for your prompt reply.

so, it's not quite the same as being paid it in the first place then!

Assuming i claim for 10000 miles in this tax year. In my current circumstances, my employer will pay me £2000 net.
I then claim for 10000 miles @ 20 pence relief from hmrc, which doesnt mean a £2000 cheque from them in April. So, essentially it means my tax code increase by the amount claimed - £2000 in this example.
Will the revenue then work out what is the total and refund me?
Out of curiousity, would you know why my current employer is only paying 20 pence per mile, compared to all the others i have worked for which give 40 pence?

Sorry for waffling! :beer:

chrismac1

Also, check whether your £100 is going through free of tax or into the taxable gross - if free of tax it will often have "FP" or similar by it. This makes a big difference, I have a couple of clients whose employer pays them an allowance free of tax. If the "gross" and "gross for tax" on your payslip differ by £100 then the £100 is in effect a cash contribution to reflect the very stingy 20 pence per mile.

CLAPTON

you can claim 10,000 miles x 20 p = £2,000 relief from the HMRC ; if you pay 20% tax then that means you pay less tax by 20% of 2,000 = £400
this is because the tax payers doesn't pay business expenses but it does allow them to be offset against 'profits'

it is your employer's 'duty' to pay business expenses but if he doesn't do so then it's between him and you

Nicknack_2

chrismac1 wrote: »

Also, check whether your £100 is going through free of tax or into the taxable gross - if free of tax it will often have "FP" or similar by it. This makes a big difference, I have a couple of clients whose employer pays them an allowance free of tax. If the "gross" and "gross for tax" on your payslip differ by £100 then the £100 is in effect a cash contribution to reflect the very stingy 20 pence per mile.

hi there,

many thanks for your prompt reply!

Do you mean if the "gross for tax" is £100 more than "gross" then they are taxing me and it's more like £70 - net?!

Nicknack_2

CLAPTON wrote: »

you can claim 10,000 miles x 20 p = £2,000 relief from the HMRC ; if you pay 20% tax then that means you pay less tax by 20% of 2,000 = £400
this is because the tax payers doesn't pay business expenses but it does allow them to be offset against 'profits'

it is your employer's 'duty' to pay business expenses but if he doesn't do so then it's between him and you

thanks for that crystal explanation! So, in an ideal world; i need to be looking at 40 pence a mile. :beer:

thanks!

CLAPTON

Nicknack wrote: »

thanks for that crystal explanation! So, in an ideal world; i need to be looking at 40 pence a mile. :beer:

thanks!

well, frankly the 40p amount has not changed since petrol was about 60/70 p per litre but there is no chance that the government will increase that tax wise but of course your employer can pay the correct price if they want

chrismac1

If the £100 is being taxed already, you claim the 40 pence a mile less the 20 pence. If the £100 is tax-free you claim the 40 pence less 20 pence less £1,200 for the year. If you've done more than 10,000 miles the official rate is 25 pence (40 pence applies only up to the first 10,000), so for these miles you claim the 25 pence less the (unbelievably tight-fisted) 5 pence your employer allows.