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Car user Allowance or Contract Hire?-Questions
oldwiring
Posts: 2,452 Forumite
in Cutting tax
A relative is an Essential Car User for a Local Authority and as such is paid a lump sum and a mileage allowance, which generally is below the standard HMRC approved rate. He has asked me about his tax liability. Am I right to think that if the total he received in a year, lump sum plus mileage id, say, £300 and payment at the approved rate would have been £200, he will be taxed on £100?
He has the option also of having a car under Contract Hire, the hire terms being based on a notional business mileage of 3500 miles a year and estimated total private mileage. Against this the employer will pay an annual contribution and my relative the insurance costs. Business mileage costs (e.g. fuel) will be reimbursed at around 8p or 9p/ mile according to engine size.
He asked my advice and I want to be sure from the tax angle, what his tax liabilities will be under both the Essential Car User and Contract Hire schemes and of course how to calculate same.
There are other questions outside the scope of Tax, but if any soul has useful advice, I will accept it. BTW for the non-tax aspects where would you suggest I post?
He has the option also of having a car under Contract Hire, the hire terms being based on a notional business mileage of 3500 miles a year and estimated total private mileage. Against this the employer will pay an annual contribution and my relative the insurance costs. Business mileage costs (e.g. fuel) will be reimbursed at around 8p or 9p/ mile according to engine size.
He asked my advice and I want to be sure from the tax angle, what his tax liabilities will be under both the Essential Car User and Contract Hire schemes and of course how to calculate same.
There are other questions outside the scope of Tax, but if any soul has useful advice, I will accept it. BTW for the non-tax aspects where would you suggest I post?
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