Mileage Relief

Peter1988

Hello,


I'm extremely confused and was hoping for some help.


In previous employment, whether I've been on a car allowance scheme or just paid a higher mileage rate on my expenses, at the end of the tax year I'd send a letter to HMRC detailing my mileage and the rate I was paid for my mileage and subsequently received a cheque for the tax relief.


I did the same this year, and have been told I need to fill in a self assessment form as the total expenses were over £2,500.


Whenever I claim other taxable expenses - food and drink, rail fares and so on I was under the impression my employer picked up the tax relief on that as a whole at the end of the tax year.


I don't understand why I've been asked to fill in a self assessment form.


On the form, it specifies how much have you been paid for the mileage expenses, but doesn't actually detail the amount per mile or number of miles. I had 2 different employers last year, 1 paying 36p per mile and no car allowance and the other paying 16p per mile but with a car allowance amount added to my pay.


Can anyone clear this up for me?

I didn't earn over £50,000 in the 14/15 tax year.


Thanks
Peter

jobbingmusician

Shall I move this to the tax board for you? You might get a better response there.

I would comment, however, that filling out an online SA tax return isn't the end of the world, and (once you have got the details you need to log in, allow at least a fortnight for this) probably won't take you more than 30 mins.

Aquamania

Peter1988 wrote: »

Hello,


I'm extremely confused and was hoping for some help.


In previous employment, whether I've been on a car allowance scheme or just paid a higher mileage rate on my expenses, at the end of the tax year I'd send a letter to HMRC detailing my mileage and the rate I was paid for my mileage and subsequently received a cheque for the tax relief.


I did the same this year, and have been told I need to fill in a self assessment form as the total expenses were over £2,500.


Whenever I claim other taxable expenses - food and drink, rail fares and so on I was under the impression my employer picked up the tax relief on that as a whole at the end of the tax year.


I don't understand why I've been asked to fill in a self assessment form.


On the form, it specifies how much have you been paid for the mileage expenses, but doesn't actually detail the amount per mile or number of miles. I had 2 different employers last year, 1 paying 36p per mile and no car allowance and the other paying 16p per mile but with a car allowance amount added to my pay.


Can anyone clear this up for me?

I didn't earn over £50,000 in the 14/15 tax year.


Thanks
Peter

Normally, any money you receive as part of your employment is subject to tax, NI, etc. That is everything, including what an employer may class as expenses.

However, often an employer will not deduct tax and NI from payments you receive that it classifies as expenses. It needs therefore to issue a P11d to you detailing this and you would usually need pay the tax and NI yourself. This is done through self assessment.

However, you can also claim tax relief on money spent and necessarily incurred in carrying out your job. (i.e. what most people would call expenses). Such tax relief is usually claimed via self assessment.

So in the end, your SA declares the money as stated on your P11d that you received tax free, and also claims tax relief on it (the two amounts don't necessarily have to be the same, but to keep things simple here, lets assume they are)

It gets a little more complicated because some expenses your employer pays, they may hold a dispensation from HMRC to allow them to pay you tax free.
In which case, these tax free payments are not included on an P11d, and you do not need to mention them to HMRC.
(e.g. dispensation is often given for employees meals incurred whilst travelling)

Even more complicated is that payments that that do not exceed the approved mileage allowance payment (AMAP) rates now have automatic dispensation (i.e. the employer does not have to specifically request a dispensation, and hope that HMRC granted - it's essentially granted to all employers)

So only payments in excess of the AMAP should be included on a P11d, and you will have to pay tax, etc on that additional payment.

(There is now a consultation in place to dispel with the dispensation system completely, and make all allowable expenses automatic - but that's for the future if it ever gets adopted)


In regards your car & mileage payments/expenses, you have 2 options:

1. The complicated one. (probably needs an accountant)
That means detailing how much you actually spent and how much you actually received, and the balance subject to tax/tax relief.

2. The easy option. (no accountant needed)
Claim the AMAP rates as tax relief.
Your car allowance will be subject to tax. (As the AMAP tax relief includes all costs involved in running your car for business use)

Add up the total number of miles you travelled on business (say 8000 miles )

Calculate the AMAP tax relief allowable (so, say 8000 miles @ 45p = £3600). You presumably know the AMAP reduces to 25p after 10000 miles per annum.

Add up the mileage money you have actually received and deduct this from the amount calculated above.
(e.g. say you did 5000 miles @ 36p = £1800, and 3000 miles @ 16p = £480, total = £2280

Subtract this from £3600 meaning you have £1320 tax relief)