Mileage Tax and Allowance

garyhopef2s

Hello,

Would anyone be able to tell me the current Mileage allowances for using private cars for business use?

At the moment we get paid 43p a mile for the first 8000 miles and then 12p per mile after that. I heard that the allowance is 43p for the first 8000 then 25p after that. Would that mean that I can claim back the difference from the taxman?

Also according to the info we have the 43p is for engine sizes 1000-1199cc and there is a higher band of 54p for engine sizes 1200-1450cc. Could we claim the difference for that too?

If we can claim back this money how many years can we claim?

Thanks for any help

Gary

Solar1

As the mileage allowance is paid by the company that you work for , they set what they consider a reasonable figure.

The figures set by the tax office are the maximum that are deemed acceptable before the payment becomes taxable. In otherwords this is the exempt amount.

So an employer may choose to pay 80p per mile for the first 8000 miles but anything over 43p is taxable. This also does not preclude your employer from using a different rate based on engine size, but again the same rule of exemption would apply and tax and NIC would be due on the balance.

Thus you cannot claim the difference from the taxman, but you could ask your employer why they are paying the rate that they do.

dejongj

This sounds like a time-warp Those rates are hundreds of years old, ok not exactly, but I think they date back to about 1998 or something like that....

I is no longer tiered based upon engine size or anything like that....Allowances that don't attract any tax are:

40p for the first 10,000 miles, 25p there afters....

So where you get 43p you'll be taxable on the 3p extra benefit....And where you get 12p you can claim back an extra 13p....

garyhopef2s

I have been doing some reading and it looks like as said above you can claim 40p for the first 10000 and 25p after that. Does this mean you can claim £4000 before getting taxed? If so could I do 9280 miles at 43p (to make £4000) and then claim back 13p per mile back off the taxman (as I gt paid 12p per mile) after that? If so its looking like my collegues and I could claim back around £1000 a year.

dejongj

garyhopef2s wrote: »

I have been doing some reading and it looks like as said above you can claim 40p for the first 10000 and 25p after that. Does this mean you can claim £4000 before getting taxed? If so could I do 9280 miles at 43p (to make £4000) and then claim back 13p per mile back off the taxman (as I gt paid 12p per mile) after that? If so its looking like my collegues and I could claim back around £1000 a year.

Don't know whether you can off-set it, sounds logical but HMRC aren't always are they?

cash99

garyhopef2s wrote: »

I have been doing some reading and it looks like as said above you can claim 40p for the first 10000 and 25p after that. Does this mean you can claim £4000 before getting taxed? If so could I do 9280 miles at 43p (to make £4000) and then claim back 13p per mile back off the taxman (as I gt paid 12p per mile) after that? If so its looking like my collegues and I could claim back around £1000 a year.

No it doesn't work like that. You multiply the number of miles up to 10000 by 40p and deduct the amount you have been paid. If the result is positive you can claim tax releif on this amount. If it is negative you will be taxed on the difference. Your emloyer should be putting this throught the payroll.

In your case as you are paid 12p for miles above 8000 you can claim tax relief of 28p per mile for any mileage between 8-10000, and 13p per mile after that.

MarkyMarkD

Just to re-emphasise what cash99 is saying - you don't "claim the 13p off the taxman" - you get tax relief on the 13p per mile, in other words you claim back just under 3p per mile (22% of 13p) or just over 5p (40% of 13p) if you pay tax at 40%.

bluep

Our firm has also stopped refunding mileage unless supported by a VAT receipt from a garage, so if you are asking because you run your own business and are VAT registered, it is also worth looking into the VAT ramifications.

dejongj

bluep wrote: »

Our firm has also stopped refunding mileage unless supported by a VAT receipt from a garage, so if you are asking because you run your own business and are VAT registered, it is also worth looking into the VAT ramifications.

Isn't that only applicable when you want to claim back the VAT element? As you need to know the petrol prices. Although saying that, it is adviseable to keep all the petrol receipts as additional 'proof' that you actually driven there....

Don't understand why an employer is not simply sticking to the rates as stated by HMRC, it makes it so much easier for all....

donnalou

My firm also want our petrol receipts, I think its a bit dodgy really as they only pay us by the mile not the total amount on the receipt so they are also claiming the VAT back for petrol used for private mileage.

I don't think this can be right

cash99

Up until Jan 06 employers claimed back vat on mileage allowances paid, based on an assumed petrol cost per mile, without any reciepts. For once in taxation a sensible view was taken that as mileage allowances cover petrol costs and vat is paid on petrol, a vat registered business should be able to reclaim this vat, rather than having to provide a petrol receipt for each journey.

Since Jan 06, after HMCE lost a European court case brought by our friends at the European commission, vat claims on mileage allowances are only allowed if covered by a fuel vat receipt.

The receipt has to be for more vat than is being claimed, and dated before (same day is probably ok) the journey took place. One receipt can cover multiple journeys.

Some employers are insisting on the receipts to make sure that they can reclaim the vat, which reduces their costs.