Car Allowance and Mileage Allowance Relief

jennifernil

You can either use the HMRC form, or just send them a letter, no need to pay anyone else. if your claim is over a certain amount, you need to do a full return.

As far as HMRC are concerned, your £6000 car allowance is just income, so that goes out of the picture.

But you are getting fuel paid for by your employer, so that is a contribution to your costs, so must be deducted from your claim.

The P11D should give you the amount you have received, and if that includes private fuel but you have repaid £30 per month, it should only be the nett figure after deducting the £30s.

This figure will not have had any tax deducted, so will form part of what you are entitled to receive tax free.

Let's assume that nett figure is £2250.

For 15000 business miles, and you should keep accurate records of these trips, you can claim relief on.....

10000@45p = £4500
5000@25p = £1250
so a total of £5750

then you deduct what your employer has paid (£2250).
That leaves you £3500 to claim relief on.

If you pay 20% tax then that would give you a refund of tax of £700.

So that you don't get in a muddle, I would request repayment of this amount, rather than have them code it out.

You will possibly find that they will then use this figure as an estimate for the following year and include it in your code number.

Then you need to check each year what you actually need to claim, and then claim back any difference. (or repay tax if you have driven less)

It's not really complicated once you think it through!

jimmo

Whilst that is mathematically correct it may not be the best way to present it.
Even on jennifernil’s figures your claim to MAR is £3500 which is significantly above the £2500 limit for using form P87.
http://www.hmrc.gov.uk/forms/p87.pdf
I am afraid you will need to complete a Self Assessment so you may as well register now so that everything will be in place by the time you get your copy of the P11D.
http://www.hmrc.gov.uk/sa/register.htm
When you complete your Return you will need to complete an SA102.
http://www.hmrc.gov.uk/forms/sa102.pdf
You must then declare your salary plus car allowance as pay in box1, the net value of the fuel provided by your employer in box 13 and then claim the full amount of MAR in box 17.
It is very important that you do this correctly because if you don’t your Return will not match your employer’s Returns and may well result in a formal Enquiry.

acidstrato

That's great Thank you jennifernil for breaking it down for me I really needed that, it makes a lot more sense when its simplified.

and thank you jimmo for pointing out I will need to complete a self assessment. I will do as you recommend and register right away.

It seems that a tax refund of £700 would basically cover the tax that I paid on my car allowance so I breakeven there, it's just a shame I still have to pay NI and student loan on it which is about £90ish


Thank you all so much I appreciate you sticking by to help me understand this process!