Using own car for work and loosing out

Flyboy152

rob7475 wrote: »

Hi,

Sorry to hijack this thread but I have a similar question.

My employer pays me £375 per month car allowance which I am taxed on. Any business mileage gets paied at 15ppm. The way fuel prices are going, this barely covers fuel, never mind wear and tear.

I know I can fill in a P87 form to get tax relief but i'm not 100% sure what i'll actually get back. Will I get the tax on the difference between 15p and 40p (ie. 5 ppm) or will I get the full 25ppm back?

Thanks,

Rob

If you do ten thousand business miles per annum, you will pay £800.00 less tax per year (one £1,600.00 if you are a higher rate tax payer). But you will then be taxed on the £0.15 pence per mile, so will be pay £450.00 more tax per year, so your net balance will be £350.00 less tax per year (or £30.00 per month). If you do twenty thousand miles per year, your net increase will be £700.00 pounds. You will also pay tax and national insurance of £1,607 a year (2010/11) on the car allowance.

How many business miles are you doing?

spiro

getmore4less wrote: »

Please point this out on HMRC site I could not find it.

http://www.hmrc.gov.uk/rates/travel.htm

Flyboy152

victor2 wrote: »

Replace car allowance with company car.
A car allowance is taxable income, just like basic salary.

But the company car is a taxable benefit.

You are still using your own vehicle for company business, so are entitled to the 40ppm.

The employee can claim relief on forty pence per mile from HMRC, his employer doesn't have to give him anything.

Flyboy152

spiro wrote: »

40ppm is the HMRC agreed level if you get no car allowance, 15ppm is the HMRC agreed level if you get car allowance. Therefore there is nothing you can claim back from HMRC. If you could all get you is the tax oin the difference. You need to bear in mind that these allowances are designed to cover the full cost of a car only the costs over owning it for private use and business use i.e. increased service frequency.

:huh: Since when?

Flyboy152

rob7475 wrote: »

I've had a search on the HMRC site and I can't find a clear answer either. There only seems to be answers for those that either have a company car or those who use their own car. No mention for people who use their own car but get a car allowance.

I may ring my local tax office to try and get a clear answer out of them.

Because there is no more information needed.

If the employer provides a car, for business and personal use, it is a taxable benefit. If the employee pays for business fuel, the can claim relief on a range of allowances dependent on engine size and fuel type (from 14ppm to 23ppm). If an employee uses their own car (whether this is provided for by an allowance, or the employees own funds, is neither here nor there), they can claim relief on 40/25ppm for ten thousand miles/or above.

Flyboy152

spiro wrote: »

http://www.hmrc.gov.uk/rates/travel.htm

:wall: :wall:

rob7475

Flyboy152 wrote: »

If you do ten thousand business miles per annum, you will pay £800.00 less tax per year (one £1,600.00 if you are a higher rate tax payer). But you will then be taxed on the £0.15 pence per mile, so will be pay £450.00 more tax per year, so your net balance will be £350.00 less tax per year (or £30.00 per month). If you do twenty thousand miles per year, your net increase will be £700.00 pounds. You will also pay tax and national insurance of £1,607 a year (2010/11) on the car allowance.

How many business miles are you doing?

Hi Flyboy,

I would estimate that i'll do maybe 5000 business miles a year. So, if I claim tax relief on the difference between the 15ppm i get and the 40ppm max, does that mean i'll get £250 off the tax man?

Cheers

Rob

Flyboy152

rob7475 wrote: »

Hi Flyboy,

I would estimate that i'll do maybe 5000 business miles a year. So, if I claim tax relief on the difference between the 15ppm i get and the 40ppm max, does that mean i'll get £250 off the tax man?

Cheers

Rob

Yes, that is correct, that would be the net balance.

But you have to offset the tax and national insurance paid on the allowance and add the savings for not paying company car tax. Then add or offset the savings or costs from the allowance. If your car costs less that the allowance to buy, tax, insure and maintain, or it costs more, these need to be factored in as well.

sunshinetours

In simple terms if you are getting monies paid via your wages / salary that is taxed and NI'd you are getting additional salary in effect. Whether part of that is deemed to be to helps towards providing yourslef with a car is irrelevant, its still your own car - as such you can use the approved mileage rates with no further tax consequences for yourself or your employer

If you have a car provided by your company in your company's name and your tax code is adjusted to reflect the benfit in kind of this car, you can only use (in most cases) the lower Company car advisory rates

New company car rates actually now available from 1/3/11

aries69

The outcome from today is they are going to pay me 25p per mile, no allowance, they said I have to submit my detailed mileage log fortnightly to receive payment based on the 25p per mile.

The last 7 days for instance I have driven 114 business miles and 16 personal. Based on 114 x 25p I will get £28 back but have put £30 in petrol - unfortunately I cannot wait until next year to claim from HMRC for the 15p = £17.

Its leaving a very nasty taste - I have printed out the whole thread and theres so much to take on..... all in my favour thankfully.

Thanx again