Business Use of Private Car and Income Tax

Traffic_Guru

I'm completely new to this forum and have a specific question about the reclaimation of paid income tax.

Okay here goes. I'll try to explain the best way I can without confusing everything.

I drive my own car for business. I reguarlly exceed 15000 miles per year and get paid by the business for these miles at the government
prescribed rates of £0.40 per mile for the first 10,000 miles then at the lower rate of £0.25 per mile thereafter. (I am aware the rates have changed in the 2011 budget, but do not apply to this question)

I pay tax at the higher rate of 40%.

Recently a colleague, who is in a similar position to myself heard from a friend that: If you submit tax returns for the past 7 years detailing all of the milage claimed as per the P11d.
You can claim back the income tax on the fuel (per mile)
used for business purposes.

What he is suggesting is, Having paid income tax on the money earned, then spending that money buying fuel for business use, you are effectively paying tax twice. Once on income tax and again at the pump.

Example.

10,000 miles @ £0.40 per mile = £4,000.00
5,000 miles @ £0.25 per mile = £1,250.00
Total £5,250.00 returned in expenses

Income tax paid at the higher rate on the money earned to buy the fuel.

Tax claimable on £5,250.00 @ 40% (Higher tax rate) = £2,100.00

Over the past 7 years that's a large chunk of cash.

Having claimed the expenses per mile at the rates of 40/25p per mile allready, can I claim this tax back.

I've been told some people who have done this allready have been paid out quite significant sums of money in tax refunds, but have also been paid by their employer at the 40/25p rate for expenses.

What I don't want to do is; submit this as a claim then find out later its not permitted and have HMRC come back to me for the money claimed wrongly.

Any help greatly appreciated.

taxing

Hmm.

First of all, mileage paid up to (and at) the HMRC allowed (AMAPS) rates does not feature on a P11D.

Mileage on a P11D will be amounts paid in excess of those rates which are taxable (and also subject to class 1 nic).

Usually, the employer puts those excess amounts though payroll but for niic purposes only (so no income tax is charged on those excess payments).

The excess payments then go onto the P11D and the P11D figure will suffer an income tax charge.

What I think may have happened with this 'friend' is that the employer has also charged income tax on the excess payments through payroll (and not just the nic part) and then also put the excess (again) on the P11D - so double taxation.

This would give your friend a valid claim for a refund.

This situation does not seem to apply to you.

If I have gone off on a tangent, then I have mis-understood, but this is the only 'scenario' I can think of which would produce a valid refund claim.

Regards.

antrobus

Yes, I think the short answer would be along the lines of 'no'.

If you already "get paid by the business for these miles at the government prescribed rates" then you've already been reimbursed for the costs of your business mileage, so there's nothing more for you to claim.