1st years tax and mileage allowance

koops

my daughter started as a mobile carer last oct and paid £507 tax on £5900 earnings last year ...her company paid her £1187 tax free at 20p a mile,she claimed for the remaining 25p via the p87 expenses form from HMR&C,,£1484..the tax mans reply has awarded her only £507...why is this?......cheers,koops

Caz3121

you don't claim the 25p from the HMRC, you claim the tax relief on it.
A 20% taxpayer would get 20% of the amount, a 40% taxpayer would get 40%
not come across this before but it looks like, as a 0% taxpayer it seems like they have given her a full refund of all the tax she paid as her earnings were under the personal allowance
this year if she is a 20% taxpayer then she would get 20% of the 25p per mile back

System

koops wrote: »

my daughter started as a mobile carer last oct and paid £507 tax on £5900 earnings last year ...her company paid her £1187 tax free at 20p a mile,she claimed for the remaining 25p via the p87 expenses form from HMR&C,,£1484..the tax mans reply has awarded her only £507...why is this?......cheers,koops

Was the £5900 her only income. If so that sounds right. Mileage relief reduces the income liable to tax. But £5900 would be below her personal tax allowance anyway. So a tax bill of zero and all tax paid under PAYE now refunded.

koops

thanks for your replies....forgive my ignorance but if she earned below her allowance last year isnt she entitled to a rebate anyway?..koops

Dazed_and_confused

Yes, what ceiberman is getting at is that the mileage claim makes no difference for that tax year - if the total taxable income from all sources for the tax year was less than the Personal Allowance then all the tax paid (£507) would be refunded anyway. The mileage claim may have resulted in this being repaid a little quicker but has had no effect on the tax refund due. You mentioned the job started in October so for the current year (6.4.12 - 5.4.13) similar weekly o rmonthly income would equal total pay of approx £12/13k and any mileage allowance claimed could result in a tax reduction