Company Car, Business Mileage declaration for Tax credits

stevd

Thanks Guys so much

It is all clear now, as far as I know I do bring my car home, but then that stops there, I travel from home straight to Clients most of times and to office sometime just to pick up assignments or paperwork, I travel to 2 cities record all my mileage, I don't think there is any private use.

I am writing a letter to Tax Credits office as on telephone they just don't listen, explaining the facts hope they then do not consider the reimbursement as income not do the car becomes a taxable benefit. My car is tracked so an indirect understanding no private use.

princessdon

Just tell them it is reclamation of a none taxable business expense for which you provide receipts, it doesn't affect your taxable income and isn't used to produce your P60, they should get the message.

I just needed to be clear because IF they had deducted tax - then your business were also classing it as a benefit in kind and would have needed declared.

stevd

Thanks guys for your great help and advice. I reconfirmed with my company and it is suprising to find that they have declared this to be a taxable benefit as they do not prohibit the private use of this vehicle but this is still not confirmed with the payroll so the 810L appears on my payslip, which they say that they will change it to 310L.

I have been told that the the amount (19000-list price of the car & 25% of it that is around 4700 will be deducted from the PA to make it 310L) and I will receive my P11 end of the year.

But I am not an accountant I still don't understand what to declare to HMRC for Tax credits:
is it
25000(gross pay example)+4700(taxable benefit of car) = 29700
or 25000+4700+3600(business mileage reimbursed)=33300
or 25000 remains declared as total income, but only to pay tax the personal allowance changes.

I pay for the total fuel and I get my money back as per the business miles I do x by a rate for example 18p/mile. All my trips are tracked by company on a tracking system, the only private use is to come back from the office to home (3miles) sometime. But mostly it is direct to customers.

I AM SORRY I HAVE WRITTEN A BIG STORY, BUT THANKS TO YOU GUYS I HAVE A LOT UNDERSTOOD THESE COUPLE OF DAY!! A VERY BIG THANK YOU!!

mgdavid

so you are going to be absolutely hammered for the Benefit In Kind tax on a company car which you only use for the 3 miles between home and work.

IMO you need to talk this through with your manager and HR people.
What you want is to leave the co car at work overnight and use your own car for the 3 mile journeys. You will save a fortune - I'll let somebody with their finger on the pulse work out how much better off (or less badly off) you would be this way.

Pont

Don't know if this helps as I didn't have a company car but got reimbursed petrol expenses when using my own car.

However, I called the tax credit office to explain the situation and was told to deduct all expenses from my overall income and to submit that figure. Never a problem.

Although have to agree with mgdavid - you're likely to come unstuck as you're receiving a benefit in kind but you're not utilising that 'benefit'. Could you not use your own car for work purposes and simply get reimbursed for business miles? Echo the thoughts that this needs talking through with your employer.

zagfles

stevd wrote: »

Thanks guys for your great help and advice. I reconfirmed with my company and it is suprising to find that they have declared this to be a taxable benefit as they do not prohibit the private use of this vehicle but this is still not confirmed with the payroll so the 810L appears on my payslip, which they say that they will change it to 310L.

I have been told that the the amount (19000-list price of the car & 25% of it that is around 4700 will be deducted from the PA to make it 310L) and I will receive my P11 end of the year.

But I am not an accountant I still don't understand what to declare to HMRC for Tax credits:
is it
25000(gross pay example)+4700(taxable benefit of car) = 29700
or 25000+4700+3600(business mileage reimbursed)=33300
or 25000 remains declared as total income, but only to pay tax the personal allowance changes.

I pay for the total fuel and I get my money back as per the business miles I do x by a rate for example 18p/mile. All my trips are tracked by company on a tracking system, the only private use is to come back from the office to home (3miles) sometime. But mostly it is direct to customers.

I AM SORRY I HAVE WRITTEN A BIG STORY, BUT THANKS TO YOU GUYS I HAVE A LOT UNDERSTOOD THESE COUPLE OF DAY!! A VERY BIG THANK YOU!!

First of all you need to confirm how you expenses are paid - are they really paid through payroll and taxed? (This would be unusual). Or are they paid separately tax free? And if they are paid through payroll, do they really get taxed, or are they non-taxable elements? Your payslip should confirm this - check how the total taxable to date increases from one month to the next and whether it includes the mileage costs. Or ask the company.

If they don't get taxed, then you need to give tax credits your normal salary (use your P60, which won't include the expenses) plus your benefits (ie car - from the P11D which the company will give you). I think there's a separate box on the tax credit form for benefits in kind. Ignore the expenses completely, assuming they are within the guidelines http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm.

If your expenses do get taxed then you need to deduct the allowable expenses from the P60 income as per links in my first post, also you need to get the tax rebated you paid so write to the tax office. But make absolutely certain you are getting taxed on them first.

But like the others have said the company car situation is crazy - you are getting taxed on a benefit you don't use which is costing you close to £1000 in tax and could be costing you close to £2000 in reduced tax credits! You should really do one of 3 things:

1) Get rid of your own car saving all the expenditure and use the company car for personal use.

2) Use your own car for company business and see if the company will pay you a car allowance. If they do they might still only pay petrol but you can claim tax relief on the difference between the rate they pay and the private car rate http://www.hmrc.gov.uk/rates/travel.htm

3) Ask them to write to you forbidding personal use - and don't use it at all for personal use, and get them to drop the taxable benefit. Personal use will include travel to your normal place of work, so as someone else said you'd probably need to leave the company car at work. (unless you are officially based at home).

Pont

I've 'thanked' the advice from Zagfles as it's excellent!

IMO you could be best served by printing out this advice and showing it to your employer - as it stands they are putting you in a ridiculous situation.

stevd

Thank you all guys, especially Zagfles. I had no option but to accept as is as they have already submitted the details of the car to HMRC and it is a good job and I will have to sacrifice bit to retain this. I thought the lesser benefits I have the more prouder I get.