Mileage Rates for Work

fitshase

Hi,

I was talking to my brother in law at Christmas about work and he works for a company who expect him to use his car for visiting different sites for his job. He mentioned that his company pay him 20p per mile.

Now, in my last job I used to get paid 40p per mile when I used my own car but in my new job I get a car allowance so my mileage rate is less.

I have looked at the HMRC website and it still shows 40p per mile for the first 10,000 miles then 25p per mile thereafter.

Is there a way he can claim the difference back from HMRC? It has been going on for a couple of years now and he just assumed that the 20p per mile was the "going rate".

I've tried to make sense of the HMRC site but it is a bit baffling and I cannot seem to find out if he can claim it back and if so, how!

Can anyone help?

thescouselander

Your brother in law can claim the tax back on the difference between the 40p rate and whatever he was paid for the first 10,000 miles. After that he can claim tax back on the difference between the rate paid and the 25p rate.

What he needs to do is get evidence of all the miles claimed from his employer and then fill in the relevant form from HMRC and send all this in.

vaio

To clarify (maybe)…..

I don’t think he’ll actually get the difference between 40p and what he actually gets from his boss, more that he won’t have to pay tax (& NI I think) on it.

Say he gets 20p per mile and does 10k a year. So there is £2k a year uncovered.

I think that £2k effectively gets added to his personal allowance so he doesn’t pay tax & NI on it so the actual cash in hand is the tax (and NI) he would have paid on the £2k. So he’ll actually be about £680 (basic rate tax) or £960 (higher rate tax) better off in cash terms.

Badly explained but I’m sure someone more knowledgeable will be along soon and explain it properly.

Hammyman

He needs to complete a P87 Expenses in Employment at the end of the tax year. The amount he would need to claim is the difference between what his employer pays and the HMRC rate so if the employer pays 20p per mile, he claims 20p per mile for the first 10,000 miles then 5p for every additional mile above that. The amount he claims will be deducted from his gross PAYE and the amount of tax he should pay based on the new gross figure will be worked out then deducted from what he has paid and he will be refunded the difference.

VERY VERY VERY IMPORTANT POINT:

He needs to find out if his employer has vehicle insurance to cover his car when on company business. If not, he needs to get business use added to his insurance. If he doesn't have business use (either on his own policy or employers) and it came to light he was driving as part of his job, an insurance company would refuse to pay out.

vaio

Hammyman, your view is the same as mine (but better explained) on the tax side, do you know if you also get the NI back?

thescouselander

I dont think you get the NI back.

fitshase

Thanks all for your input - I thought it would be the case that he could claim the difference back but I didn't know the correct form or how it worked. He has confirmed that he has business use on his insurance as it was the first thing he did when he was asked to use his car for work.

I'll get him to get the appropriate form (P87 form - thanks Hammyman) and fill it in.

Cheers!

daveyjp

So he's subsidising his company to carry out work for them - how generous of them - does he pay to enter the building and go to the toilet too? There are very few cars which cost less than 50p a mile to run, I was getting 40p a mile 20 years ago.

pink_princess

Thanks for this thread ,im paid under this per mile.Will be negotiating a new contract by Monday .

fitshase

daveyjp wrote: »

So he's subsidising his company to carry out work for them - how generous of them - does he pay to enter the building and go to the toilet too? There are very few cars which cost less than 50p a mile to run, I was getting 40p a mile 20 years ago.

I agree that it should be higher but that is the rates set up by HMRC so that's all you can claim. Surely if they gave you more then it would be a taxable benefit? I get a car allowance and 17p per mile but the current price of fuel makes that a bit of a laugh!

I'm fortunate that the 2 companies I have worked for have always paid the maximum payable by HMRC so there is no need for the hassle of claiming the difference myself.

vaio

I think it might also be the case that if your car costs more than 40p then you can also claim the extra but you need to prove the costs. The HMRC 40p figure is the max you can get without having to provide receipts etc

(or I might have dreamt it)