Car insurance - business use

TheGardener

I need to renew my car insurance, I work in the public sector, I have to use my own car to travel to meetings etc. I have to check the box for business use for car insurance quotes. It never used to make a difference to the cost (been doing it over 20 years) but now it does - about £50 pa more. I get 45p per mile but HMRC and Tax Credits say I make a 'profit' which is taxable, it affects my tax code and tax credits. Given the additional wear and tear on my vehicle + insurance + actual petrol cost it seems like I am subsidising my employer. Is it me - or is this unreasonable?

forgotmyname

Try a different insurer? It makes no difference with some, but those companies may not be competetive for you in the first place.

Tried all the comparison websites and the companies that are not listed on them?

Caz3121

TheGardener wrote: »

I get 45p per mile but HMRC and Tax Credits say I make a 'profit' which is taxable, it affects my tax code and tax credits. Given the additional wear and tear on my vehicle + insurance + actual petrol cost it seems like I am subsidising my employer. Is it me - or is this unreasonable?

It sounds like you do a lot of business miles as the 45p per mile you are paid is the correct HMRC amount for the first 10,000 miles and then it drops to 25p so it is only the mileage over 10,000 the 20p extra per mile you receive would be taxable
Many employers pay less than the HMRC rates and the user can only reclaim tax relief on the difference

eg 20,000 miles per annum, employer pays 20p per mile
received from employer - £4,000
tax relief for 20% taxpayer on delta - £600
total £4,600

20,000 miles per annum, employer pays 45p per mile
received from employer - £9,000
tax due for 20% taxpayer - £400
total £8,600

If you do such significant mileage, is there an option to use a pool car or have a company supplied car?
How many business miles do you do in a year?....if less than 10,000 there would be no tax implications

TheGardener

That's really interesting caz3121 - I actually don't do many miles at all - maybe around 600 a year. Most journeys are to other local offices. My tax code is 1044L and there was an amount of £100.45 for 'company car and fuel' on my tax credits renewal which is classed as 'income' so I am sort of taxed twice I think? That's why I was disappointed about the charge for insurance. Is this wrong or am I just misunderstanding it.
There is a free pool car but its based at an office 2 miles from where I work.

Caz3121

you should not be paying tax on the 45p per mile, nor should it be treated as income as it is the HMRC rate...do you have your tax coding notification to see how they calculated the 1044? how does the mileage reimbursement show on your payslip?
the tax credits info sounds incorrect also as you neither have a company car nor fuel card.
I can see your point about the insurance premium given that it makes up such a large % of the amount you are reimbursed due to it being a relatively small number of miles

TheGardener

My mileage shows on the 'pay and allowances' section of my payslip - my basic salary then number of miles and then the amount paid so for instance in August (I only submit a claim every 2 or 3 months as the mileage is so low) it say 112 miles and £50.40 respectively.
I can't lay my hands on my code letter. I did question the Tax Credits thing but that lady on the helpline just said she knew it seemed unfair but that it was right? Should I challenge it again?
I am a basic rate payer with no other 'allowances or expenses'.

UPDATE Just called HMRC and they have said there is an error in my tax code and they have amended it - they were reducing it for a fuel payment over 45p so that's that bit sorted - now to tackle CTC's
UPDATE 2 - Just called CT helpline and they had made a mistake but it was based on the mistake HMRC were making so they have amended my TC award too.
I know its not a lot of money but every little helps as they say...Thanks caz3121 - I knew something wasn't quite right but you confirmed what I though.

charliewocka

I just renewed my insurance and went with Direct Line. Very competitive quote and they insure for business use as standard.