Tax on mileage payments

CHW

Apologies if this has been covered before but I didn;t find much on a search.

I do approximately 150-200 miles a month, but no more than 1000 per year of work mileage- my employer gives me 45p per mile on top of my salary but this amount is paid before tax, meaning that on my P60 my end of year salary appears to be a few hundred pounds higher than my contracted salary, based on mileage payments.

While I have a moral objection to paying tax on money that I've already earnt, paid tax on when I earnt it, then paid tax on at the fuel pump, only to be taxed on it again when my employer reimburses me for it, I wondered whether this was strictly correct in a taxation sense. I was looking through the HMRC website and I think my employer is getting this a bit wrong. It seems to me like I should be able to do up to 10K miles a year getting 45p per mile without being charged extra tax on it?

Have I got this right? and how do I go about claiming it back if I have?

thenudeone

You are right.

Neither the P60 figures nor your monthly taxable pay should include legitimate travel expenses for business journeys, provided the company's expenses policy is covered by an HMRC concession (which nearly all of them are). Usually the only circumstances where HMRC would insist mileage expenses were taxable at source is if the rate per mile exceeded their allowance or if the policy allowed employees to claim for some mileage which HMRC does not consider allowable (eg: from home to your normal place of work)

I would ask your employer why they have added legitimate expenses on to your P60. In normal circumstances, they shouldn't.

Has your monthly tax deduction been calculated before or after the mileage reimbursement?

In any case, if the expenses policy isn't covered by an HMRC concession, and have been taxed as income; you need to contact HMRC and get the mileage costs treated as a tax-deductible expense. You may need to do a self-assessment tax return to get the mileage costs allowed.

CHW

Tax is deducted after the mileage payments. I'll give HMRC a ring if a tax return is the only way to settle this one

CHW

they suggested a P87- I'll fill it in and send it off and see where I get

00ec25

are you absoletely certain that the total on your P60 has had tax deducted from the mileage amount? HMRC do encourage employers to pay expenses via a payroll so that the tax is treated correctly

your posting is rather confusing.
You state that you get 45p before tax, are you certain that it is then actually taxed and therefore the few hundred pounds differnce on your P60 is after tax has been deducted ?

on the basis of your statement above then if you put in a P87 (which is the correct form to use BTW) it is far from clear that you are claiming for mileage that has actually been taxed