Tax Free Allowances

CLAPTON

Cybernezz wrote: »

Hey Clapton,

In my first example I was assuming no expenses and comparing receiving expenses with not receiving i.e. receiving expenses brought the payments into upper tax to nil - does that make sense?

i don't really understand your question

my illustration shows how HMRC will deal with your mileage tax claim and shows that the tax charged is exactly the same whether you make a separate mileage claim each year or they change your tax code


which is what everyone is telling you

Cybernezz

CLAPTON wrote: »

i don't really understand your question

my illustration shows how HMRC will deal with your mileage tax claim and shows that the tax charged is exactly the same whether you make a separate mileage claim each year or they change your tax code


which is what everyone is telling you

Hi Clapton,


It would be impossible to deduct the expenses off gross until they after they occur - thus, more of the salary would be above the £35,001 amount and be taxed at 40%
Only after completing a Self-Assesment for expenses above £2500 - would the amount be paid back/ taken off gross and I suspect the tax already paid on the amounts over £35,001 wouldn't be given back.

Does that make sense?

I understand your post but disagree on the basis - only in yr2 onwards as per jennifernil comment would the expenses be considered and deducted off initial gross.

Surely?

CLAPTON

Cybernezz wrote: »

Hi Clapton,


It would be impossible to deduct the expenses off gross until they after they occur - thus, more of the salary would be above the £35,001 amount and be taxed at 40%
Only after completing a Self-Assesment for expenses above £2500 - would the amount be paid back/ taken off gross and I suspect the tax already paid on the amounts over £35,001 wouldn't be given back.

Does that make sense?

I understand your post but disagree on the basis - only in yr2 onwards as per jennifernil comment would the expenses be considered and deducted off initial gross.

Surely?

Sorry but you have repeatedly been told that you are wrong.

I've explained EXACTLY how they will work it out.

It is true that it will only happen during the year if the taxcode is changed but when you submit your mileage claim after year end they will calculated as I've described.

The tax man always looks at the whole picture and recalculates using the full set of figures.

Cybernezz

CLAPTON wrote: »

Sorry but you have repeatedly been told that you are wrong.

I've explained EXACTLY how they will work it out.

It is true that it will only happen during the year if the taxcode is changed but when you submit your mileage claim after year end they will calculated as I've described.

The tax man always looks at the whole picture and recalculates using the full set of figures.

Well Clapton if that is the case, Brilliant!!
I'm afraid you have more faith in the Taxman than I do!
NOTHING in my circumstances has changed in the past 4 years yet every year I seem to receive an 'underpayment' adjustment.

That tells me the taxmans calculator is playing up.

CLAPTON

Cybernezz wrote: »

Well Clapton if that is the case, Brilliant!!
I'm afraid you have more faith in the Taxman than I do!
NOTHING in my circumstances has changed in the past 4 years yet every year I seem to receive an 'underpayment' adjustment.

That tells me the taxmans calculator is playing up.

well, if you have benefits in kind then you will usually have an underpayment as the details of the BIK aren't available until after year end.
(as normally BIK increase from year to year so even if your tax code has been adjusted it will have been based on the previous year's value)

jennifernil

Yes, I would agree entirely with that. You are always going to be a year behind with benefits as you yourself will only know the correct amount for the year once you get your P11D, and it is the same for the taxman. He gets the figures when you get them.

So, if you opt out of the car scheme, do not base your sums on getting the tax relief on the mileage as you go along, base them on your monthly car allowance and what your employer does pay for mileage.

I think they have till the end of June, after the end of the TY, to issue your P11D, (IF you would still have any benefits to declare?) but you can prepare your figures meantime. If no benefits then you can submit your SA immediately after the end of the TY. You should then get your refund quite quickly.

Be prepared to get grilled on what journeys you are making, so keep very accurate records.

They may then alter your tax code, but no guarantees.

You do realise you only get tax relief on the £5000 mileage shortfall? The taxman does not refund the full £5000.

You will only pay the correct amount in the end, nothing to worry about there. My OH was in the same position for 32 years and it always worked our correctly.

Cybernezz

jennifernil wrote: »

Yes, I would agree entirely with that. You are always going to be a year behind with benefits as you yourself will only know the correct amount for the year once you get your P11D, and it is the same for the taxman. He gets the figures when you get them.

So, if you opt out of the car scheme, do not base your sums on getting the tax relief on the mileage as you go along, base them on your monthly car allowance and what your employer does pay for mileage.

I think they have till the end of June, after the end of the TY, to issue your P11D, (IF you would still have any benefits to declare?) but you can prepare your figures meantime. If no benefits then you can submit your SA immediately after the end of the TY. You should then get your refund quite quickly.

Be prepared to get grilled on what journeys you are making, so keep very accurate records.

They may then alter your tax code, but no guarantees.

You do realise you only get tax relief on the £5000 mileage shortfall? The taxman does not refund the full £5000.

You will only pay the correct amount in the end, nothing to worry about there. My OH was in the same position for 32 years and it always worked our correctly.

Hi jennifernil,


Could you explain what you mean ref the shortfall?
my understanding of the shortfall is (Gross HMRC ppm payment - company ppm) = shortfall.

My company pays .15p for every mile.
Thus shortfall's of:
30p first 10,000
10p all other mileage.

Total @ 30,000 miles - £5,000.
All calculations above based on the 2012/13 Tax year.


Am I completely wrong Jennifernil?
I wouldn't be surprised

jennifernil

Yes, you would get £5000 less from your employer than you are allowed to receive, so you are entitled to tax relief on that £5000, not a repayment of the actual £5000 shortfall.

This would lop between £1000 and £2000 off your tax bill, depending on how far you were into the 40% band.

Cybernezz

jennifernil wrote: »

Yes, you would get £5000 less from your employer than you are allowed to receive, so you are entitled to tax relief on that £5000, not a repayment of the actual £5000 shortfall.

This would lop between £1000 and £2000 off your tax bill, depending on how far you were into the 40% band.

Ok - I think I understand that...
Company pays £4500 which is £5,000 shortfall.

HMRC pays 40% of the £5000 (£2000).

Total monies towards my fuel £6500.


Am I there? :T

BoGoF

Cybernezz wrote: »

Ok - I think I understand that...
Company pays £4500 which is £5,000 shortfall.

HMRC pays 40% of the £5000 (£2000).

Total monies towards my fuel £6500.


Am I there? :T

Assuming you have paid tax on £5000 of your earnings at 40% then yes.