Business Mileage - what am I entitled to?

The_Governor

Thanks nearlyrich, what you say there is right.

The crux of my question was really, should I be paying tax on the portion of my earning that falls within the allowed limit?

I'm paying tax every month on my car allowance and the mileage payments my employer makes to me, which doesn't feel right but I may be misunderstading it all...

Gorgeous_George

I only use my car if the company pays 40p. They prefer to pay 25p per mile.

As for claiminmg tax on underpaid mileage, I believe that you can backdate claims for a number of yesrs. Six years rings a bell.



GG

Hoddie_2

The_Governor wrote:

I get £260 a month car allowance from my employer, and 13.9 pence per mile.

I've done 3860 miles so far this year.

So, I think that according to what I can gather my calculation shouuld be this:

3860 * .139 = £536.54
260 * 12 = £3120

If the £260/month is given to you tax-free, then yes you have a taxable benefit. This would be unlikely. It's more likely that the £260 is just extra salary and so is taxed at source - in this case it wouldn't play any part in your claim for mileage relief.

It would be that you have been paid 3860 * 0.139 (= £536.54) and the official rate would be 3860 * 0.4 (= £1,544). You can claim tax relief on the difference between the two (= £1,008 rounded up). You wouldn't get this figure back, just the tax you've paid on that, either 22% or 40% depending on your salary.

Important - The time limit for claiming a repayment is roughly 5 years and 8 months after the end of the tax year. Claims for 2000/01 must be received by HMRC before the end of this month. Act quickly if this applies to you.

The_Governor

That's interesting Hoddie thanks. I thought I read on the IR site that fixed allowances for cars did play a part in the calculation though, but you sound like you know more about it than I do!

Hoddie_2

Some employers choose to pay a flat monthly amount, say £50, to cover any mileage up to a fixed number of miles, say 250 miles, and then pay Xp per mile above 250. So whether the employee did 100 miles or 232 miles, the amount they'd receive from the employer would be £50 - I think this is what is referred to as fixed allowances.

By the way, I edited my post above to include details of the claim deadlines. If you're wanting to claim for 2000/01 you should have a read.

The_Governor

Thanks again, my allowance is based on mileage it's supposed to cover the additional wear and tear so i claim for all the miles I do plus the I get the allowance each month.

Hoddie_2

I've just re-read your post above #12...

I'm paying tax every month on my car allowance and the mileage payments my employer makes to me, which doesn't feel right but I may be misunderstading it all...

They really shouldn't be taxing you on the mileage payments. They will report this to HMRC as a TEP (taxable expenses payment) and you'd be expected to claim tax relief on the full 3860 * 0.4 (= £1,544). The payments you've received would not go on the claim form because you've been taxed on them (if you did include them you wouldn't get this tax back). You should, however, provide your P11D when claiming.

jennifernil

You need to be clear on what you have and have not been taxed on through your PAYE.
As said above your £260 per month is treated as salary and should have been taxed, but your 13.9p per mile should not have been taxed.
You are entitled to receive 40p per mile tax free, so in your case £1544.
If you are a 40%taxpayer and have been taxed on all the money you received then you should be entitled to a tax refund of £617.60
If you received the 13.9p with no tax deducted then you would be entitled to a refund of £402.98.
I have to work this out each year for my husband, he is in a similar situation.
This is now the only way you can claim tax relief for using your own car for work.

The_Governor

That's really clear now, thanks Jennifer.

georgan

Hi guys,

where in the tax return form one declares the balance of miles * (£0.40/m - company rate/m)?

In field 1.32 called "travel and subsistence"? If yes, should one put declare the figure calculated by the balance formula above?

Or should one address this mileage separately by submitting a P87 in a separate correspondence with the HMRC?

Thanks for any feedback.

Aris