Claiming tax reflief on business mileage...

pivotalgubbins

I'm wondering if anyone can advise on my current scenario, as I am extremely confused, especially after doing a Google search!

I have started a new job recently and as part of this role I often either travel to my normal place or work, travel to a random location (for work - meetings, etc) or work from home.

Currently, I claim mileage for every journey I make, MINUS the miles I would have normally commuted to and from work (i.e. 60 miles). So, if I do a 200-mile round trip to Cardiff, I would only claim 140 miles.

Today, my boss has asked that I deduct all miles that I effectively save, so this means the 60 a day I normally commute and 60 miles a day off each expenses claim for each day I work from home. For example, if I work from home 5 times a month I would need to deduct 300 miles from my claim, on top of the miles I deduct for each individual journey.

I hope you are following me - I have no problem at all with my the new policy as such, it is a tiny company in early days and I love working there - the last thing I want to do is cause an issue. However, I was wondering whether I should claim all or a portion of my mileage myself through tax relief to improve my personal situation? Here are the specific questions I need help on:

(1) Is there anything wrong with the principle I've laid out above - i.e. should I be able to claim tax relief on my business mileage?

(2) When I do business mileage (i.e. not my normal commute) - do I simply claim from home to my destination or do I calculate it from the office to the destination?

(3) Do I need to deduct miles from my claim for mileage I would of done if I was commuting or mileage I would have done if I didn't work from home for the day?

(4) Should I claim mileage from work as per the new policy from my boss and claim the remaining via tax relief or would I be better to claim all my traveling via tax relief?

(5) Depending on the answers to the above, can I claim tax relief on the miles I have already deducted from my previous claims - e.g. the 60 miles I deducted from my 200-mile round trip to Cardiff?

(6) If I claim all or some of my miles via tax relief - does this affect my employer in any way (i.e. does he start incurring extra cost that he was trying to avoid by putting in the above policy)?

Thank-you so much in advance for any help you can give me - it is extremely appreciated! :beer:

paulwellerfan

what does it say in your contract?
was has your boss said?

pivotalgubbins

paulwellerfan wrote: »

what does it say in your contract?
was has your boss said?

Thanks for the response but I'm not looking to rely on my contract in this instance, nor bring up any issue with my boss. I understand his policy therefore I want to explore the tax relief route.

pjclar02

Hello there

The contract point raised previously is pertinent to the discussion, as this will provide an initial steer as to what is considered as your "normal place of work", i.e. is it your home or is it the office you travel to most often. However, to address your points in turn as best I can, subject to this detail:

1) The principle as laid out is sound, if you are travelling to a temporary workplace, then you can indeed claim mileage;

2) Providing the temporary workplace is substantially different to your normal commute, in terms of distance and direction, then you can claim the full mileage from home to that temporary workplace;

3) No, not if you are going in a completely different direction.

4) You would be better off having the per mile reimbursement from your employer, rather than just claiming the mileage costs as a tax deductible expenses;

5) Subject to point 2) above, then yes, if your employer only reimbursed you for 140 miles for a 200 mile trip, then yes you can claim tax relief on the additional 60 miles. Also, if you are paid less than the authorised rate of 45p per mile for the first 10,000 miles you can claim the difference as tax relief;

6) No - your claim to tax relief has nothing to do with your employer.

Hope this helps

pivotalgubbins

First of all, thank-you so much for the response - it is much appreciated. :j

Hopefully you won't (or someone else) can answer some follow-up questions. I've numbered again, where applicable, for ease of reference and response.

pjclar02 wrote: »

Hello there

The contract point raised previously is pertinent to the discussion, as this will provide an initial steer as to what is considered as your "normal place of work", i.e. is it your home or is it the office you travel to most often.

Thanks for the heads-up, I have checked my contract and it does state that my principle place of work is the main office address (it actually changed between the date of signing to my actual start date, but I assume I can just treat the new address as the office address).

pjclar02 wrote: »

2) Providing the temporary workplace is substantially different to your normal commute, in terms of distance and direction, then you can claim the full mileage from home to that temporary workplace;

2) Is there any specific criteria here with regards to distance and direction or is it just common sense / reasonableness.

For example, if I did a journey of 40 miles (normal commute of 30 miles one-way) in a completely different direction I could claim the mileage, but it is was around about the 30 mark (or less) then I shouldn't?

What if I did 40-miles in a pretty similar direction (i.e. east bound - how vague is the direction criteria - do I have to basically pass my place of work (near enough)?). Can I just claim the extra 10 in this instance?

pjclar02 wrote: »

4) You would be better off having the per mile reimbursement from your employer, rather than just claiming the mileage costs as a tax deductible expenses;

4) Can you explain why this is the case as I'd assume that I could claim the full 45p (subject to limits) in either instance?

Or is this based on the fact that I could only do it annually and I'd effectively be funding my own fuel until reimbursed.

pjclar02 wrote: »

5) Subject to point 2) above, then yes, if your employer only reimbursed you for 140 miles for a 200 mile trip, then yes you can claim tax relief on the additional 60 miles. Also, if you are paid less than the authorised rate of 45p per mile for the first 10,000 miles you can claim the difference as tax relief;

5) Brilliant - sounds like I should claim as much as I can via my employer then and the 'balance' via HMRC.

As mine seems quite a complicated procedure do I just need to document every journey I do and make sure the mileage my employer makes me deduct is properly and clearly recorded.

pjclar02 wrote: »

Hope this helps

It really does - thank-you again. :beer:

pjclar02

Hello again

2) There is no hard and fast rule on this, and is down to HMRC interpretation. If you are going in completely the opposite direction, then you will be able to claim the full amount of miles travelled.

If you are travelling toward or around the permanent office then you are into more of a grey area and in this instance then yes, you could only claim the additional mileage taking you beyond the office.

4) I think this is a common incorrect assumption. If you claim tax relief for your mileage, you only get a tax deductible expense of 45 per per mile - HMRC do not repay you 45p per mile. Therefore, if you are a higher rate taxpayer, you save 40% of the 45p per mile. Whereas if your employer reimburses you, you actually get 45p back.

5) Yes - everyone who claims mileage should maintain a log of their business journeys in case of enquiry by HMRC.

jennifernil

I wouldn't entirely agree with your deductions, OP.

If you go from your home in a totally different direction, I would say you should be able to claim the full amount (under HMRC rules). Even if your employer expects you not to claim from him if it is shorter than your normal commute, or to deduct your normal commute if it is longer.

If you go somewhere on your way to the office, this is a bit trickier. HMRC do not generally allow this. Going somewhere from or beyond the office is very straightforward, you claim the extra distance.

You should probably clarify the various scenarios with HMRC, there must be some guidance somewhere.

You will need to keep very detailed records of all journeys.

If there is mileage that HMRC will allow, but your employer does not pay, you can claim tax relief on that, also on any shortfall on the 45ppm.

But this is tax relief only, not the 45ppm. Say you had 1000 miles allowable but not paid for, you could claim relief on 1000 x 45p , which if you pay tax at 20% is a tax reduction of £90. At 40% it's £180.

Do you ever work at home and not visit a client? If so, I hope your boss is not asking you to deduct what you saved on your commute from some other claim?!

Found this, which may help......

http://www.hmrc.gov.uk/mileage/employee-factsheet.pdf

jimmo

pivotalgubbins wrote: »

2) Is there any specific criteria here with regards to distance and direction or is it just common sense / reasonableness.

For example, if I did a journey of 40 miles (normal commute of 30 miles one-way) in a completely different direction I could claim the mileage, but it is was around about the 30 mark (or less) then I shouldn't?

What if I did 40-miles in a pretty similar direction (i.e. east bound - how vague is the direction criteria - do I have to basically pass my place of work (near enough)?). Can I just claim the extra 10 in this instance?

See here for the HMRC interpretation.
http://www.hmrc.gov.uk/manuals/eimanual/EIM32300.htm
Also look at the links within that page, particularly EIM 32306.

pivotalgubbins

pjclar02 wrote: »

2) There is no hard and fast rule on this, and is down to HMRC interpretation. If you are going in completely the opposite direction, then you will be able to claim the full amount of miles travelled.

If you are travelling toward or around the permanent office then you are into more of a grey area and in this instance then yes, you could only claim the additional mileage taking you beyond the office.

That makes sense - I'll just have to apply some common sense in this regard then.

pjclar02 wrote: »

4) I think this is a common incorrect assumption. If you claim tax relief for your mileage, you only get a tax deductible expense of 45 per per mile - HMRC do not repay you 45p per mile. Therefore, if you are a higher rate taxpayer, you save 40% of the 45p per mile. Whereas if your employer reimburses you, you actually get 45p back.

My goodness, this is complicated!

I think I am with you though - so if my employer pays me for 200 miles in a month and I get £90, but I actually travelled 400 miles and should have received £180, I can claim relief on the £90 I didn't get paid at either 20% basic rate or 40% at higher rate?

Thanks again - you've been a great help.

pivotalgubbins

jennifernil wrote: »

I wouldn't entirely agree with your deductions, OP.

If you go from your home in a totally different direction, I would say you should be able to claim the full amount (under HMRC rules). Even if your employer expects you not to claim from him if it is shorter than your normal commute, or to deduct your normal commute if it is longer.

If you go somewhere on your way to the office, this is a bit trickier. HMRC do not generally allow this. Going somewhere from or beyond the office is very straightforward, you claim the extra distance.

You should probably clarify the various scenarios with HMRC, there must be some guidance somewhere.

You will need to keep very detailed records of all journeys.

If there is mileage that HMRC will allow, but your employer does not pay, you can claim tax relief on that, also on any shortfall on the 45ppm.

But this is tax relief only, not the 45ppm. Say you had 1000 miles allowable but not paid for, you could claim relief on 1000 x 45p , which if you pay tax at 20% is a tax reduction of £90. At 40% it's £180.

Thanks for the above - this is extremely useful. I think the poster below has given good definitions on what I can and cannot claim, so I feel a bit more confident in this regard now.

jennifernil wrote: »

Do you ever work at home and not visit a client? If so, I hope your boss is not asking you to deduct what you saved on your commute from some other claim?!

Effectively, I guess he is. To put it simply, I would normally do 300 miles a week commuting. Say I do a 200-mile round trip to a client on Monday and then go to the office Tuesday and Thursday, but work from home on the Wednesday and Friday, I would only be able to claim 80 miles as mileage.

Obviously this is a really simple example and I would instead spread this over a month (to match my expenses cycle).

I'm not over the moon about the development but I guess his thinking is that I should not re-charge mileage that I would be expected to do if I just went to the office every day. I'm eager not to rock the boat though!

jennifernil wrote: »

Found this, which may help......

http://www.hmrc.gov.uk/mileage/employee-factsheet.pdf

It does, thank-you so much again.

pivotalgubbins

jimmo wrote: »

See here for the HMRC interpretation.
http://www.hmrc.gov.uk/manuals/eimanual/EIM32300.htm
Also look at the links within that page, particularly EIM 32306.

Thanks, that is really useful.