Taxed on milage allowance

bonnycollis

I currently do around 20,000mls per year and use my own car, I would like to apply for tax relief on my mileage, been on Gov.com and other websites which state that mileage allowances are tax and NI free, my employer has inform HMRC that they pay 40p per mile, unfortunately this is only paid if we take a client out, which in my case does not happen. I get paid an extra £1.50 per house call made and have been told this is to cover my working time travelling from 1 call to another and my mileage, I am taxed on the whole of this payment. Can employers tax you on mileage payments or not?

Keep_pedalling

Who is your employer?

While they say it is to cover milage it sounds more like a bonus payment based on the amount of visits you do, which is taxable. It is actually illegal for companies not to pay your milage costs, and although you could claim the tax back on your milage it is difficult to do without documented proof of the milage as your company do not record how much you do.

Castle

As Keep pedalling said, it sounds like a bonus payment. If you are also paying National Insurance then they are treating it as part of your gross pay. If your employer is telling you it includes a mileage element, then this has to be paid tax free, and shown separately on your payslip.

You need to speak to your employer to get them to confirm which it is.

If your company doesn't keep mileage records, then you should start doing so; 20,000 unpaid business miles is a lot, and the costs are coming out of your bank account!

dave2

The £1.50, it sounds like pay and should be taxed as such.

However...

The mileage rules for tax expense claims apply regardless of what the employer actually pays (erm, with some trivial exceptions not worth mentioning, like passengers).

You can claim as tax deduction 45p per mile for the first 10,000 miles and 25p thereafter. You then subtract what your employer has actually paid you for mileage (but ignore anything that has been taxed through PAYE).

Please note you cannot claim for commuting to your normal place of work.

NB by "your own car" I assume wholly personal car and not any sort of company-provided car.

getmore4less

Keep_pedalling wrote: »

Who is your employer?

While they say it is to cover milage it sounds more like a bonus payment based on the amount of visits you do, which is taxable. It is actually illegal for companies not to pay your milage costs, and although you could claim the tax back on your milage it is difficult to do without documented proof of the milage as your company do not record how much you do.

Love to see that bit of law.

Keep_pedalling

My information came from the TUC who are pretty hot on these things.

http://www.worksmart.org.uk/rights/what_expenses_should_i_be_paid_as

Unless the OP is is getting in 100 visits a week he is being seriously ripped of. On top of this his crappy employer is making illegal deductions from what little payments they are making. It is also possible that by paying their own travel expenses that their pay in reality falls below the NMW.

I would definitely be looking for an alternative employer to this modern day Marley and Scrooge.

bonnycollis

Thanks for all your help, yes the car is my own, as for the NMW , If anyone ever queries the hrs we work, including the time spent travelling between calls they would see that we are below NMW, when I asked about this at work I was told the £1.50 per call was to cover the time spent travelling between calls.

When I then asked about mileage I was told the £1.50 was for mileage. So I have come to the conclusion that whatever department queries either mileage or NMW they have it covered so long as the departments don't compare notes.

Keep_pedalling

And people say we don't need trade unions!

Luckily I was always in a union while a wage slave even when I somehow made management grade.

bonnycollis

What baffles me is, I must be missing something, although its says mileage allowances are exempt from tax and insurance on gov.com, an accountant I spoke to says its up to the employers discretion on wether it is payed tax free or not. I would like to know the benefits to any employer that taxes us on mileage, not only do we pay tax and NI on it but the employer also has to pay 13.8% NI on it. we can claim tax relief 45p per mile but cannot claim the 12% NI we pay on it, where is the benefit to them.

Castle

Tax and NI would only be applicable if you were being paid more than the 45p per mile for the first 10,000 miles and then 25p for the other miles. For 20,000 business miles the annual allowance would be £7,000; I'm guessing you're not getting paid that much?

Keep_pedalling

blondebubbles wrote: »

It's not an employers discretion on whether it is tax free or not. The do have discretion on whether to pay mileage and how much.

And you have the discretion to tell them to stuff their job where the sun don't shine.

I think in this case it might be worth the OP ringing the ACAS help line (0300 123 1100) to clarify what the legal obligations are as far as recompense for travelling expenses and pay for time spent travelling (I can't find anything specific on line) If they are not covering the cost of fuel and knackering your own car for their profits which effectively takes you below NMW then you should have a case to pursue them for back expenses.