Income tax on business mileage

rust_2

Hi, I've just started going through my P60s and payslips for the last 5 years and spotting some questionable numbers. I'm confused on a number of points, I'll start with this one

I used to use my personal car for work. I got paid 41p a mile from my company for useage expense. I am aware that the limit is 40p per mile under 10,000 miles (which I am).

I've seen that 40p bit described as a tax free limit and as taxable expense payment. This is where I get confused. My interpretation of tax free limit is that for the first 40p paid for every mile traveled is not taxed income tax. Anything over 40p is. (i.e. 1p).

As an example during 2005/6 I traveled 1882 miles and was paid £773.51 in form of a petrol allowance. Only problem I see is that it goes through PAYE (my wage slip) as taxable gross pay... all of it. So my hope is that I will be able to claim back the tax on the first 40p per mile (i.e. £165.61 @22%).

Clarity would be magnificient, a simple "yes you are right" or "no you can't" would do!

withabix

Are you SURE it has been taxed?

Various things can appear on payslips that aren't taxed, such as subsistence and expenses.

However, if it HAS been taxed, you can claim tax relief for the last 6 years IF your work location is a temporary one (typically applies to construction sites etc) or the journey is not to your normal place of work.

So, you could be due 22% of (40p per mile less cost of actual fuel used less 1p) per mile (assuming you're a basic rate tax payer), so probably about 6p per mile in tax rebate. (Assumes your car uses 13p of fuel per mile as an average figure).

You need to contact your tax office. You will need mileage records as backup proof.

rust_2

withabix wrote: »

Are you SURE it has been taxed?

4 hours ago I would have said yes, but I'm now more in the dark than before.

I've seen a couple of online sites that will do it for you and then take a cut (usually %20) but you then pay VAT on it as well which is quite a chunk of anything I would get back. Is that normal?

LittleVoice

What information have you been giving the sites? I assume it needs your gross salary and car expenses and any contribution to a contracted out pension scheme. You also need to ensure you have the correct tax year (for personal allowance purposes and use of your tax code).

I do not understand why any question about VAT arises in your salary tax calculation. When you write of "my company" do you mean you are the owner of the company?

paulus

If the travel is not to a temporary workplace (ie it's overtime travel to work or it's to a site where you've been for more than 24 months) it will be taxable. If it's to a temporary workplace it should be OK. Probably worth checking with your payroll people first as it makes no sense for the employer to tax this if it's allowable, as employer (and employee) will also be paying NICs.

If tax relief is due try it yourself rather than pay commision plus VAT. Have a go at the P87:
http://www.hmrc.gov.uk/forms/p87.pdf

Conor_3

rust wrote: »

4 hours ago I would have said yes, but I'm now more in the dark than before.

Garb a payslip. Look at the part that shows gross pay and taxable pay. They should be a different amount if the mileage allowance hasn't been taxed.