Mileage -v- company car allowance

InsideInsurance

Just a query, for those that are more knowledgeable than me (so probably most people)

A while ago I used to have a "flexible benefits loading" rather than any fixed benefits. It was a bit of a misnomer because you didnt have to spend any of it on benefits and could take the loading as additional take home pay and just get taxed on it. Alternatively you could spend it plus your regular salary on benefits (so you werent capped at just the loading).

As well as your normal pension, PMI, PHI, childcare vouchers etc there was also the option of a company car and given you were paying for it yourself you could get basically any car at all. Given my choice of cars isnt the most fuel efficient in the world I decided not to get a company car as their lease prices + BIK was much more than I could get it for privately from my net salary.

Any how, after qualifying for the company car option Accounts started paying my expenses claims for mileage (was normally a couple of hundred miles a month, never massive mileage) at company car rates rather than personal car rates.

I queried it with them and they advised that HMRC rules were that if you are getting an allowance towards a company car then you are only allowed to claim company car rates even if you've decided not to have a company car.

Is this correct? If it isnt, how far back are you entitled to claim the delta between whats received and what was allowed?

jennifernil

Incorrect. You said your car allowance is taxed along with the rest of your salary, so as far as HMRC are concerned it is just salary.

I think you can still go back at least 4 years to reclaim the tax on the difference.

see here...

http://www.hmrc.gov.uk/about/paye-taxpayers.htm

InsideInsurance

You would be taxed if you took it simply as cash, if you used it for pension or childcare vouchers etc then it wasnt taxed.

There was not an explicit part that was for "the car", just as a manager you got a 30% loading to your salary that you could "buy" whatever benefits you wanted (as a non-manager grade you got a 16% loading and could "buy" any of the benefits you wanted other than company car)

Far too long ago to claim if the caps 4 years (I expected it would be) but still curious to know "the rules" in case it ever comes up again

jennifernil

Sounds complicated, but I think I understand.

All that matters is whether you used your own car, or a company car, HMRC don't care whether some of the money you got was an extra allowance if you are paying tax on it.

Sounds like it is the company who has their rules on mileage, whether you take the car or the cash.

InsideInsurance

jennifernil wrote: »

Sounds complicated, but I think I understand

It was relatively simple if you started there after they introduced the whole new system as you had, for example, £50,000 basic plus an additional £15,000 benefits allowance. That £65k could be taken all as cash, all spent on benefits or anywhere in between

Basically you had a £65,000 salary but for things like 20% bonus or 10% profit share etc your basic (£50k) was what was used.

Where it was more complex is if you were old timer at the company and had had a company pension, PHI etc and trying to work out if you were better off sticking with what you had or moving across to the new scheme with the 30% loading. All made more difficult by the fact that the old pension scheme was age related for the employers contributions.

As a spring chicken I jumped at it as it was a big uplift but the oldest groups it was a modest drop (but gave flexibility) and the middle aged people it was probably a small benefit now (plus flex) but again worse off in another 3-5 years when their company contributions would have gone up under the old scheme.

I was always surprised that they did a really hard sale on the whole thing, about how great it was for everyone and almost was pushing the take the whole 30% as cash route when all in the press at the time was about how people arent preparing for retirement properly.