Company Car, Business Mileage declaration for Tax credits

stevd

Hi all,
Sorry if this is posted anywhere else, I searched everywhere couldn't find any more information.

I have recently changed work and my new job involves travel to customers at different locations. I have been given COMPANY CAR and I put fuel in it and based on tracked mileage I cover I get reimbursed for it, which is average £300/month (£3600/year). I renewed all the information regarding this with Tax Credits helpline, but they have added this to my yearly gross salary as income although I explained to them that this is an amount I pay for fuel on petrol station and then I get it back at the end of the month so there is no profit, but I was told my weekly tax credits will now reduce as my income has gone up, but in fact the £3600 is what I spend and get back, so no actual income.

I don't use this car for private. What do I do? This fuel reimbursement is fully for business use and my job involves 90% travel. do I have to reduce it from from gross and then inform them seperately? If I do so the P60 will show different figure.

Please help!! really appreciate. Thank all.

zagfles

Does your employer not have a dispensation to pay expenses gross? Do they add the expenses to your P60 income? If so you're probably paying tax on the expenses too!

You need to deduct allowable expenses for the purposes of both tax and tax credits, see:

http://www.hmrc.gov.uk/incometax/how-to-get.htm

http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04202.htm

stevd

Thank you so much I really appreciate :j:j your help.

The links were also really helpful. My gross salary is more that £8500 per year, so do I reduce the amount of fuel expenses from my gross salary as income earned and then quote this fuel amount separately as a benefit received so that the total amount earned is equal to

Gross earning/per year - amount spent on fuel for job duties + amount reimbursed = total income earned to declare for tax credit.

Note that these payments would not be excluded from chargeable income for income tax purposes for employees earning £8,500 or more or directors. However, as an equivalent deduction for the value of these expenses can be made from income for tax purposes, the tax credit exclusion achieves the same result. (sections 336 and 337 of ITEPA 2003)

Thanks once again for your help:T

Icequeen99

But if you have a company car, there will be a taxable benefit and that will count as income for tax credits. You should get a P11D from your employer showing your taxable benefits, and the renewal notes will tell you which boxes to include for tax credits.

However as Zagfles says if there is a dispensation in place, the expenses are just effectively ignored for tax and tax credits. If there isn't then you can deduct mileage costs as per the links given by Zagfles.

IQ

princessdon

Is this a pool car (ie you pick it from and return it to work) and others drive or is this a personal car for you only?

Also what is your tax code?

stevd

Many thanks for replying

It is not a pool car as I am do business development my job involves travelling to customer locations, sometimes I travel straight to customers and return to office, and sometimes to office first but generally I travel 90%, I am only paid the mileage for job duties, that means they do not pay me to travel to work and back. The car has trackers and I am only allowed to claim for miles I incur from office to customers. The car remains with me and I take it home. But I have my own car that is what I use for personal journeys.

Thanks

princessdon

Then what is your tax code? Have they deducted use of the car?

stevd

The latest payslip says 810L, and the previous month it was 747L. There is no deduction apart from Tax & NI.

Thanks

Icequeen99

At the end of this tax year, you will get a P11D which will show the taxable benefit of the car. The tax for that will be then taken from next years code (coded out in 13-14). It is that taxable benefit figure you will need to add for tax credits as income.

Then you deduct your mileage expenses.

IQ

zagfles

Icequeen99 wrote: »

At the end of this tax year, you will get a P11D which will show the taxable benefit of the car. The tax for that will be then taken from next years code (coded out in 13-14). It is that taxable benefit figure you will need to add for tax credits as income.

Then you deduct your mileage expenses.

IQ

It sounds like the car isn't available for private use, so surely it wouldn't then count as a taxable benefit?

Icequeen99

zagfles wrote: »

It sounds like the car isn't available for private use, so surely it wouldn't then count as a taxable benefit?

Fair point. I wasn't sure from reading his post.

OP - whether there is a taxable benefit on the car will depend on whether there is private use or whether it is explicitly prohibited. See http://www.hmrc.gov.uk/manuals/eimanual/eim23405.htm

IQ