Company car allowance & claiming HMRC mileage

marcofoo

I travel quite a bit in my job and I have an option to either take a company car or take a £5k annual car allowance.

Company policy states that mileage can be claimed at 15p/mile.

I am thinking about taking the £5k car allowance but to make it worthwhile I need to be able to claim 30p/mile (45p less 15p) from HMRC.

HMRC allow employees to claim 45p/mile to temporary places of work. Does the £5k allowance affect my ability to claim?

Thanks in advance.

marcofoo

blondebubbles wrote: »

Just to clarify, HMRC won't give you the 30p per mile, they'll give you tax relief on the 30p per mile.

If the £5000 is for car allowance and not mileage then it doesn't get taken into account.

Thank you. So effectively I can still claim tax relied on 45p less 15p per mile, i.e. 30p/mile. This on the condition that the £5k is towards purchase of a car or other methods of travel, rather than towards mileage/fuel allowance.

General_Grant

marcofoo wrote: »

Thank you. So effectively I can still claim tax relied on 45p less 15p per mile, i.e. 30p/mile. This on the condition that the £5k is towards purchase of a car or other methods of travel, rather than towards mileage/fuel allowance.

The 45p/mile applies to the first 10,000 business miles per year, not every business mile. I expect you know it reduces to 25p/mile for any additional miles.

You get relief (ie the tax which would have been paid) in order to leave you with the 30p or 10p you would otherwise have been able to claim without paying tax.

BRB-79

I was just about to start a new thread about this when I saw your post.

I too have a £7k car allowance on top of my basic and my employment contract specifically states that it's to cover me up to the first 5000 business miles. So I have been making these trips all over the country and paying my petrol without thinking about it until someone in the office mentioned a HMRC mileage claim.

I put in claims in December for tax years 2011-12, 12-13, and 13-14, each one for about 1100 - 1700 miles. Because my employer does not pay expenses up to the first 5000 miles for me, I didn't bother putting any claims in with them.

After 2 months HMRC contacted me asking for more info about the 2012-13 mileage claim and a copy of my employment contract. I supplemented this with a letter from HR confirming I am paid the car allowance but taxed on it etc. 4 weeks later I received a payment of just over £300 for the one claim, proving that even with a car allowance you can claim. Just to be clear, I put in the claim for the full 45p per mile.

I am still waiting on the other 2 tax years to be paid but HMRC just confirmed on the phone that they are very busy, the claims are in the system and they would be dealt with very soon.

Mcjsharpe

Never used one of these before but am after some advice! I recently set up a very small business. I have a main paye job. The business made a few thousand but as it's the first year my expenses were larger than the income...
The main expenses was petrol trying to generate new work, however I paid for this out of my own pocket thinking I would be able to claim this back at 40p per mile as its under 10,000 miles. I have been advised today that this will not be the case, as it will be written off against tax,which leaves me out of pocket.
Any advice is greatly appreciated

footyguy

Mcjsharpe wrote: »

Never used one of these before but am after some advice! I recently set up a very small business. I have a main paye job. The business made a few thousand but as it's the first year my expenses were larger than the income...
The main expenses was petrol trying to generate new work, however I paid for this out of my own pocket thinking I would be able to claim this back at 40p per mile as its under 10,000 miles. I have been advised today that this will not be the case, as it will be written off against tax,which leaves me out of pocket.
Any advice is greatly appreciated

Hi & welcome to MSE :hello:

You probably should have started your own thread, probably on the rax saving board, rather than bumping someone elses thread from months ago.

However, my questions to you would be:
1. Who advised you
2. Why are you thinking that advice may be wrong
3. Have you done anything (other than join an open internet forum where anyone who you have no idea what experience they have, may post) about using an advisor that you don't appear to trust.

PasturesNew

Mcjsharpe wrote: »

.... thinking I would be able to claim this back at 40p per mile as its under 10,000 miles. I have been advised today that this will not be the case, as it will be written off against tax,which leaves me out of pocket.

Yes, you don't claim it back, you just don't pay tax on that part.

e.g. you make/sell things and generate £1000. You drive 1,000 miles generating that business.

[1] £1000 for goods sold, paying basic rate tax you'd pay £200 in tax on that, walking away with £800 of income.

[2] But, what you do is offset your expenses, so you look and say "I did 1,000 miles @ 40p/mile = £400. This is my expenses column". So now you put in a tax form saying you earnt £1000 and had expenses of £400. Now your income is just £600 (£1000-£400) and you pay 20% tax on that amount - you pay £120 tax on the £600, which leaves you with £480 in your hand.

Difference:
[1] £800 in your pocket
[2] £400 expenses in your pocket + £480 "after tax" = £880 in your pocket.

Of course, if you're a 40% taxpayer, the figures end up as [1] £600 in your pocket [2] £660.

There has never been an actual "claiming back" situation. Nobody gets handed money ... it's just that you are not taxed on your expenses.

Savvy_Sue

Mcjsharpe wrote: »

Never used one of these before but am after some advice! I recently set up a very small business. I have a main paye job. The business made a few thousand but as it's the first year my expenses were larger than the income...
The main expenses was petrol trying to generate new work, however I paid for this out of my own pocket thinking I would be able to claim this back at 40p per mile as its under 10,000 miles. I have been advised today that this will not be the case, as it will be written off against tax,which leaves me out of pocket.

You ARE out of pocket, because your new business has made a loss not profit. And you must get your head round the difference between claiming expenses from your employer in your PAYE job, and paying for expenses incurred as part of the self employment. The self employment can't pay you what it hasn't got!

However, the good news is that you can offset the LOSS from your new business against the tax you have paid in your PAYE job, when you complete your tax return. So you will not have that loss repaid to you, but you will pay less tax while you're making a loss.