Tax Relief on Business Mileage

CeePeeBee

Hi Guys

I posted on this a little while back and I saw a couple of others posted too. I just want to ensure I'm 100% ahead of the end of the financial year so I can put a claim in. Here is my situation.

I'm given a car allowance, however that is taxed so treated as any other source of income. My employer gives me 16p per mile across the board.

Therefore my understanding is that for the first 10,000 miles of business mileage I complete, I should be able to claim the tax back on the 29p difference per milke (assuming 45p per mile is still the standard).

In that scenario using 1000 miles as a round figure I work out the calc to be:

1000 miles x 16p = £160
1000 miles x 45p = £450
£450 - £160 = £290 of which 20% is £58
Therefore £58 for that month can be claimed back from the HMRC.

First, can you please confirm my calculation is correct (and obviously over 10k it'll reduce to 25pence I think).

My second question is that some months I breach the 40% tax barrier due to other bonuses so I'm wondering how that plays into the whole business mileage calculation?

My final question is where on God's green and bountiful earth do the forms for this relief claim reside? I'm stunned I can't find them.

Thanks in advance for any assistance. :j:j:j

booksurr

correct calculation - but you would claim £290 not £58
that way you will get the correct relief amount based on what your tax rate is for that year

you claim once per year for the whole year, not each month, so the calculation takes care of itself as your total taxable pay for that year will be known to HMRC and thus whether you are 20% or 40%

use P87, one form for each tax year, it can be done online:
https://www.gov.uk/government/publications/income-tax-tax-relief-for-expenses-of-employment-p87

note however if your total expenses (ie the 290 in your example) totals more than £2,500 for that tax year you will need to register for self assessment tax return and submit that way

obviously to exceed £2,500 if the only claim is mileage related you need to do more than 8,620 business miles ie (0.45-0.16) = 0.29 x 8,620 miles per tax year = £2,499.80 in claimable expenses
so do 8,621 miles per year and you'll need to do SA. Patently if you do more than 10,000 miles per year you will need to register for SA to make your claim

CLAPTON

CeePeeBee wrote: »

Hi Guys

I posted on this a little while back and I saw a couple of others posted too. I just want to ensure I'm 100% ahead of the end of the financial year so I can put a claim in. Here is my situation.

I'm given a car allowance, however that is taxed so treated as any other source of income. My employer gives me 16p per mile across the board.

Therefore my understanding is that for the first 10,000 miles of business mileage I complete, I should be able to claim the tax back on the 29p difference per milke (assuming 45p per mile is still the standard).

In that scenario using 1000 miles as a round figure I work out the calc to be:

1000 miles x 16p = £160
1000 miles x 45p = £450
£450 - £160 = £290 of which 20% is £58
Therefore £58 for that month can be claimed back from the HMRC.

First, can you please confirm my calculation is correct (and obviously over 10k it'll reduce to 25pence I think).

My second question is that some months I breach the 40% tax barrier due to other bonuses so I'm wondering how that plays into the whole business mileage calculation?

My final question is where on God's green and bountiful earth do the forms for this relief claim reside? I'm stunned I can't find them.

Thanks in advance for any assistance. :j:j:j

is your 1000 miles per month or per year?

CeePeeBee

Many thanks for your help. I'm currently sitting at nearly 19,000 business miles at the end of Jan so yeah, I think a Self Assessment form is required. Can I ask where I'd get this and I'm assuming it's not as straight forward as the P87?

Also, to clarify, the £290 difference in claim is what I'd put down, to which they would only give me the tax on that back, rather than me adding the tax only amount in, correct? (that sentence made more sense in my head).

Many thanks

Darksparkle

CeePeeBee wrote: »

Many thanks for your help. I'm currently sitting at nearly 19,000 business miles at the end of Jan so yeah, I think a Self Assessment form is required. Can I ask where I'd get this and I'm assuming it's not as straight forward as the P87?

Also, to clarify, the £290 difference in claim is what I'd put down, to which they would only give me the tax on that back, rather than me adding the tax only amount in, correct? (that sentence made more sense in my head).

Many thanks

Details here for self assessment - https://www.gov.uk/register-for-self-assessment/overview

You record the expenses you are claiming, not the tax you are claiming back.

So the difference between what the employer pays you and the HMRC rates.

CLAPTON

CeePeeBee wrote: »

Many thanks for your help. I'm currently sitting at nearly 19,000 business miles at the end of Jan so yeah, I think a Self Assessment form is required. Can I ask where I'd get this and I'm assuming it's not as straight forward as the P87?

Also, to clarify, the £290 difference in claim is what I'd put down, to which they would only give me the tax on that back, rather than me adding the tax only amount in, correct? (that sentence made more sense in my head).

Many thanks

if you have done 19,000 by end Jan then you may weel do (say) 24,000 miles

so
10,000 at (45-16) = £2,900
plus 14,000 * (25-16) =£1,260
so total claim is 4,160

if you are a 40% tax payer you will get back £1,664 after self assessment

Bigphil1474

My understanding is that the car allowance (lump sum?) is included in your perceived income per mile. If you get £100 per month car allowance and do 1000 miles at 16p, you are actually getting 26p per mile as 10p per mile comes from your car allowance. That's how it's always worked where I am - we currently get 40.9p per mile and a lump sum of £80 per month, but I still end up losing some of my tax free allowance as overall I am receiving more than the 45p per mile allowance. Having said that, I'm only travelling about 3,000 miles a year as it is all local journeys, so it won't be the same for your 19k miles.

booksurr

Bigphil1474 wrote: »

My understanding is that the car allowance (lump sum?) is included in your perceived income per mile. If you get £100 per month car allowance and do 1000 miles at 16p, you are actually getting 26p per mile as 10p per mile comes from your car allowance. That's how it's always worked where I am - we currently get 40.9p per mile and a lump sum of £80 per month, but I still end up losing some of my tax free allowance as overall I am receiving more than the 45p per mile allowance. Having said that, I'm only travelling about 3,000 miles a year as it is all local journeys, so it won't be the same for your 19k miles.

your understanding is fundamentally wrong

a car allowance is simply extra salary and is taxed as such with income tax and NI applied accordingly. It has nothing whatsoever to do with the number of miles driven in the car, be they business or private

post the figures for one of your payslips if you want to be shown what is happening in your own case

CeePeeBee

Hey bigphil, booksurr is correct. My car allowance is purely gross, and I get taxed on that which in the eyes of HMRC is no different than any other bonus, or salary paid to me.

[Deleted User]

CeePeeBee wrote: »

Hey bigphil, booksurr is correct. .

Indeed he is - and he is highlighting a very common and total misunderstanding of difference between car allowance (do they still call this a round sum allowance?) and mileage allowance.

SteveC091268

Right people please help.

for Tax Year Apr 2015/16 I have done 4566 miles

My company pay me 0.13p/m and so paid me = £593.58

do I get

a) the full 0.32p/m x 4655miles = £1461.12
b) 40% of £1461.12 = £584.45

If its b then surely I'm not getting proper tax relief of 45p/m

Please help a very confused individual