Can you reclaim NI on car allowances?

fi-be

Hi -
Apologies if I've missed this in another thread somewhere, but I saw an article on businessdatabase indicator co uk entitled "Do you have a right to reclaim NI on car allowances?" and wondering if anyone knows whether there is any truth in this?

I (like many others I'm sure) do receive a car allowance, and it is separately stated in my employment contract, and is not reviewed in line with my salary. Anyone got any knowledge on whether it is possible to reclaim, or had any experience in doing so?
Thanks.

CTA_2

fi-be wrote: »

Hi -
Apologies if I've missed this in another thread somewhere, but I saw an article on businessdatabase indicator co uk entitled "Do you have a right to reclaim NI on car allowances?" and wondering if anyone knows whether there is any truth in this?

I (like many others I'm sure) do receive a car allowance, and it is separately stated in my employment contract, and is not reviewed in line with my salary. Anyone got any knowledge on whether it is possible to reclaim, or had any experience in doing so?
Thanks.

it entirely depends on whether the amounts form part of your earnings or whether they were paid as motoring expenses. This would depend on the wording of your employment contract.

Indeed, I believe I am right in saying that you had to receive less than 40p a mile (for 10,000 miles) and 25p a mile (10,001+) in order to potentially qualify.

BillTrac

Car allowance is a cash payment into your account alongside your wages. It is classed as part of your taxable income therefore NI is paid as well. If you could potentially claim back NI on this it would open all sorts of loopholes.

The only thing you can claim is the difference between the amount your company pay you for business miles and the government set amount. There is a tax form, I think it's a P87, and the difference is used to adjust your tax code, i doesn't et repaid in cash

pjclar02

Hello there

I have read the article you refer to. What it essentially says is that if you are paid a blanket round-sum care allowance, then this is subject to PAYE and NIC through payroll (basically as additional salary). it sounds from what you are saying that you are indeed paid such a round sum allowance each month.

The way to avoid tax and NI, as mentioned below is to agree with your employer that instead of receiving a car allowance you are paid an amount per business mile travelled. If you already receive mileage reimbursement on top of your car allowance, then you are not going to gain anything from making the switch. You may lose out by doing this anyway, as it will depend upon the amount of the car allowance, your marginal rate of tax and the amount of business miles you travel.

FYi - the rates provided by CTA are out-of-date, as the rate for the first 10,000 miles has now increased to 45p per mile.

There is no way to recover NI already paid on a round sum car allowance unfortunately, but what you can do is structure your remuneration more effectively in the future.

Hope this helps

Colincbayley

On that note, is there a MAX allowed business mileage rate?

Example, could I pay an employee say £1.50 per mile if I so wished?

Colincbayley

Colincbayley wrote: »

On that note, is there a MAX allowed business mileage rate?

Example, could I pay an employee say £1.50 per mile if I so wished?

Forget it, just found the answer to my own question!
http://www.hmrc.gov.uk/paye/exb/a-z/m/mileage-expenses.htm