Mileage Expenses Issue

Hopkino

Good evening,

I am in a little bit of a muddle and seeking some advice from all you friendly people......

I am employed by a local authority and I use my car for business use, visiting members of the public in the line of my duty. My employer does not have 'essential car users' as they scrapped this title and payment years ago, despite me being unable to undertake my work without the use of my own vehicle.

On a monthly basis I submit to my employer an accurate record of the number of miles accumulated with supporting receipts of petrol purchase.

My employer reimburses me 60p per mile in my salary, which I have noted is taxed (or at least it does not specifically state that it is not taxed).

Last year I received from inland revenue a tax code adjustment due to the allowable expenses paid in the previous year, clawing back some £450.00 in this financial year through a tax code amendment.
I have recently received a new tax code adjustment for the forthcoming year, so it looks like they want an additional £270.00 this next financial year......

As a Social Worker, living independently, every penny is a prisoner and I am struggling to get my head around how this could be. I have spoken to the inland revenue and they have advised me that in my P11d, submitted annually by my employer to them, it does not reflect a repayment rate of 60p per mile, and that I need to provide a letter to the inland revenue stating that I wish to request a section 226 review all of my mileage claims and that they should be considered "wholly and exclusively for business use".

My understanding of the world may be a little simple here folks, but to me I get paid, and therefore taxed. I put petrol in my car (receipts to my employer) and get taxed again...... I then claim for the miles driven for business purposes, and yet again taxed...... This certainly doesn't feel or look right either, but I wondered as to other peoples understanding regarding tax paid for mileage?
As a foot note, I have read the allowable expenses information on DWP website, and still none the wiser!!!

Any help would be greatly appreciated.... After all, it's better in my pocket than someone elses :T

spacey2012

make sure your insurance know the car is used in connection of the business of a employer.

Hopkino

I really should have hedged this response in the first instance, but thank you, as a condition of my employment I have to obtain fully comprehensive business and fun insurance, which my employer has to receive a copy of......
Still the issue of tax though, and this is not DVLA related tax, purely income based question, as above.

Hopkino

Seriously folks, 74 views and no response???

JonathanA

I'm not sure of the exact detail, but my understanding around payments for mileage is that if you are paid more than the HMRC rates, then the whole amount you are paid is taxable.

HMRC allows reimbursement of mileage at a rate of 45 pence per mile for the first 10,000 miles and (I think) 25 pence per mile thereafter.

There should be no payments from your home to your designated place of work, so if you travel from home to a client, you should deduct the amount of miles you would have travelled to get to the place of work deemed to be your office.

Not quite sure why you have to submit petrol receipts to your employer, and whilst they ask for fully comprehensive cover on your car, I think the point being made was that you need to ensure you are covered for business use of your vehicle.

If that isn't correct, I'm sure someone will be along to correct me, but the issue is (I think) the amount that you are paid per mile that makes this a taxable expense, since at 60 pence per mile, you are in effect deemed to be profiting from the arrangement.

Hope that helps a bit.

ian103

http://www.hmrc.gov.uk/mileage/employee-factsheet.pdf
http://www.hmrc.gov.uk/paye/exb/a-z/m/mileage-expenses.htm

Have a read of the above, as I understand it the first 10000 @45p is tax free and then the balance at 25p is tax free. So in your case you will be taxed at your notional rate (20% / 40% or 50%) on 15p per mile for the first 10000 miles and notional rate tax on 35p for every mile over 10000.

Guessing you tax code gets amended as no tax deducted in the tax year, its recovered via you tax code the following year.