Business Mileage

mattygm

Hi all,

Sorry if this has been answered before but just wanted to spell out my situation.

I an an IT Technician for the NHS so look after all the GP Surgeries and Hospitals in out locality using my OWN car. We do on average about 700 miles p/m currently claiming the below rates:

Regular User:
44p per mile upto 9000 miles
22.6p per mile thereafter

from this July the rate is changing to one standard rate - see below:

Standard Rate:
67p per mile uptp 3500 miles
24p per mile thereafter

What i am querying here is are we able to reclaim any tax back on this business mileage as from July we are also covering a bigger area, meaning more travel that 700 miles per month, meaning this first 3500 miles will be used up within approx 4 months so will be dropping to the lower rate quickly.

Any help will be much appreciated.

Kind regards

Matt

zygurat789

An employer may pay any mileage rates, however, HMRC say what is not taxable and what is. This year 2013/14 the allowable rate is 45p per mile for the first 10,000 miles and 25p per mile thereafter.
This means that if you receive less than the above amounts you may claim the shortfall as a deduction from your taxable income and, consequently, a deduction of 1/5 of that shortfall from your tax liabiolity. if you receive more than the above amounts then you pay tax on the excess as if it were salary.
So, not only will you not be able to claim tax reflief you are probably going to have to pay more tax.

00ec25

good news: yes you can claim
bad news: your claim just got complicated

you do understand that you get tax relief at your marginal tax rate, you do not get the full cost

The HMRC approved rates are: 45ppm for the first 10,000 miles per tax year with 25ppm thereafter

so until July you are entitled to claim:
- 1ppm for the 9,000 miles (ie you claim 9000 x 0.01 = £90 and get back £90 x 20% £18 if a basic rate payer or £36 if higher ate payer)
- the next 1,000 miles are claimed at 45 - 22.6 = 22.4ppm
- anything over 10,000 is claimed at 25 - 22.6 = 2.4ppm

so at the moment if you cover 700 miles per month you'd be able to claim 700x12 = 8400 miles pa which is obviously within the first 10k bracket so you claim £84 and get a tax refund of £16.80 at basic rate

after July however your payments are above the approved HMRC rate so you will actually OWE tax on some of it, but be able to claim tax on the rest, ie
you will owe tax on the first 3,500 miles at 67-45 = 22p x 3,500miles = £770 x 20% tax = £154 tax payable
you can claim 45 - 24 = 21ppm on the next 6,500 miles so 6.5k x.21=£1,365@20% = £273
anything over 10,000 miles is then claimed at 25 -24 = 1ppm as above

so say you do 900 miles per month instead of your current 700 then you'd do 10,800 pa and would get a tax refund of £120.60 at basic rate tax

if you are notcurrently required to do a full SA tax return then you can claim via a Form P87
http://www.hmrc.gov.uk/forms/p87.pdf