Claiming tax back on business milage?

beachlou

Hello,

My OH currently gets paid 11.5p per mile for his commute to work. This gets paid each month as expenses but gets taxed on this. He has been told by his company that he can claim the tax back up to 40p per mile.

Can anyone shed any light on this, or does anyone know what he will need to do in order to claim his tax back?

Many thanks

Andy_L

No. being paid to commute to work is a benefit (most people have to get to work at their own expense) So your OH is taxed on this.

Where he to have to travel somewhere else on business (and only be paid 11.5p) then he could claim the tax back on the differance between that and the 40p

beachlou

Andy_L wrote:

No. being paid to commute to work is a benefit (most people have to get to work at their own expense) So your OH is taxed on this.

Where he to have to travel somewhere else on business (and only be paid 11.5p) then he could claim the tax back on the differance between that and the 40p

Ok thanks for that. He does travel elsewhere on business (has weekly training) Do you know if there is a form that he would need to fill in?

mor7s_2

Claiming tax relief for expenses incurred as an employee for business travel and subistence can be done using from P87. Link below will take you to a pdf version from HMRC's website.

http://www.hmrc.gov.uk/forms/p87.pdf

The form is year specific though and the 2006-07 version doesn't seem to be available yet.

You don't need to use the forms though and can claim with a simple letter and calculation.

The thing to be absolutely clear on is the distinction between temporary and permanent workplaces....this can be tougher than it sounds and a read of section 3 of HMRC guidance notes (Booklet 490) shows how even the odd trip to another location can jeopardise tax relief if there is a pattern or it is more than 40% of the time.

Once you have established that a journey qualifies you can also technically claim the cost of subsistence related to the same trip, so keep those M&S sarnie receipts from lunch just in case!

Finally, you can claim for up to 6 previous tax years if this has been going on for a long time but will need some records to support the cliam, i.e. mileage logs etc.

Good luck.

Hoddie_2

Once you have established that a journey qualifies you can also technically claim the cost of subsistence related to the same trip, so keep those M&S sarnie receipts from lunch just in case!

Not necessarily. HMRC argue that you have to pay to eat regardless whether you're at work or on a business trip. Only subsistence for overnight trips is likely to be accepted without query.

WHA

Hoddie wrote:

Not necessarily. HMRC argue that you have to pay to eat regardless whether you're at work or on a business trip. Only subsistence for overnight trips is likely to be accepted without query.

No, that is not the way HMRC view it at all. There is no mention in their manuals about people having to eat regardless - the only mention is that the claim must be "modest".

Their manual BIM47705 - http://www.hmrc.gov.uk/manuals/bimmanual/BIM47705.htm - specifically allows

"But extra costs may be incurred wholly for business purposes where a business is by its nature itinerant (for example in the case of commercial travellers), or where occasional business journeys outside the normal pattern are made. Modest expenses incurred in these circumstances may be deducted from business profits."

Hoddie_2

No, that is not the way HMRC view it at all. There is no mention in their manuals about people having to eat regardless - the only mention is that the claim must be "modest".

HMRC's general rule is as follows:

The cost of food, drink and accommodation is not in general an expense incurred wholly and exclusively for business purposes, since everyone must eat in order to live. ... where such costs are disallowable they cannot be apportioned to allow extra costs incurred from the necessity of lunching away from home or the place of business.

Other guidance also states (and I accept this isn't directly related to employee expenses):

There is a variety of expenses that the courts have held, because of their nature, to have an intrinsic duality of purpose and as such are not an allowable deduction. These include:
• Ordinary 'civilian' clothing.
• Food for sustenance.
• Having somewhere to live.
• Wishing to enjoy good health.
• Wishing to avoid a criminal conviction.
• Helping one's nearest and dearest.

HMRC will only consider allowing tax relief if the journey falls within the final paragraph of your post. I didn't explicitly rule it out by the way, just saying that from my own experience, HMRC are likely to query subsistence claims where they don't include an overnight stay.

sarahlouise210

It is very unlikely that a claim for food wil be allowed without an overnight stay

mor7s_2

sarahlouise210 wrote:

It is very unlikely that a claim for food wil be allowed without an overnight stay

It seems my Tax Inspector is as clueless as I am then!!

Interesting how a food expense no longer has duality of purpose simply because you stayed away overnight