claiming petrol allowance

whizzkid_3

my company currently pays 25 p a mile if i use my own car to go to work in another branch.

i always thought this to be very low and according to the official hmrevenue site it should be 40 p a mile for less than 10,ooo miles a year.

can anyone clarify this and tell me if i am being short changed !

Takecareofthepennies

Your company is at liberty as to how much they pay you for using your private vehicle for business trips. In fact, they are under no obligation to re-imburse you at all, unless there is a specific clause in your employment contract.

In practice, of course, they will not expect you to bear the cost of business travel yourself. So it is about finding a fair level of re-imbursement.

40p per mile is the maximum you can receive tax-free. If they paid you 50p a mile, you would have to pay tax on the 10p above the threshold. By the same token, however, you can claim tax relief on the difference between the 40p max and the 25p you actually get. This means that for every mile you do on business, you can get the tax back you paid on 15p (40p allowable - 25p actual). Not terribly interesting if you only do 100 miles a year on business, but quite different once the miles mount up - especially so if you pay higher rate tax.

Say 5,000 miles x 15p x 0.4 (40 % tax) = £300 back from the taxman!

Of course, this is not as good as the cash in hand. Having been in a similar situation (20p a mile since 1997!), I found that my boss was actually quite sympathetic when I explained that with petrol costs alone having risen by 60 % since then a rise in the mileage rate might be due (I am now getting 30p, which, in fairness, covers the cost). So prepare your case, ask nicely, and see what the boss says.