Tax Relief on Business Mileage

redpete

SteveC091268 wrote: »

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

Tax relief means that the amount of money you pay tax on is reduced by that amount, not that the amount of tax is reduced by that amount. So option b) is the correct one and you are getting the 'proper tax relief'

Why should the government (i.e. me) pay you the full balance of the 45p? You presumably receive additional money each month as a car allowance, this is paid as partial recompense for doing business miles, the 13p per mile is paid in addition to this. The tax relief is to make sure that you are not taxed on money you get that counts as compensation for doing the business miles.

wullie-eng

Sorry to jump in, saves me opening a new thread.

I don't get any car allowance, I do get 35p a mile per business mile travelled.

average around 20k a year.

Under the self assessment is the 45p rate for the first 10k only?

so 20,000 x .35 = 7000

10000 x .45 = 4500
10000 x .25 = 2500

Total 7000

Does that mean I don't need to submit a self assessment of would the 45p rate apply as no car allowance?

20,000 x .45= 9000
20,000 x .35= 7000

there fore 2000 tax deductible??

Look forward to your advise.

Wullie.

booksurr

wullie-eng wrote: »

Sorry to jump in, saves me opening a new thread.

I don't get any car allowance, I do get 35p a mile per business mile travelled.

average around 20k a year.

Under the self assessment is the 45p rate for the first 10k only?

so 20,000 x .35 = 7000

10000 x .45 = 4500
10000 x .25 = 2500

Total 7000

Does that mean I don't need to submit a self assessment of would the 45p rate apply as no car allowance?

20,000 x .45= 9000
20,000 x .35= 7000

there fore 2000 tax deductible??

Look forward to your advise.

Wullie.

as stated on umpteen websites, the 45p rate is for THE FIRST 10,000 MILES, THEREAFTER THE RATE IS 25p
https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances
so in your case:
10,000 x .35 = £3,500 paid by your employer
extra tax claimable 10,000 x (0.45- 0.35 = 0.1) = 1,000 x20% (I assume you are a basic rate taxpayer) = £200

BUT you are still being paid at 35p once you do more than 10,000, so at that point you are in receipt of a taxable benefit of 10p per mile over the allowed 25ppm

so the reverse applies, on the mileage from 10,000 - 20,000 you receive 35p (ie another £3,500 from your employer) but owe 10,000 x (0.35-0.25 = 0.10) = 1,000 x20% = £200 extra tax

so in the case you ask about with exactly 20k miles per year you will get nothing as the shortfall of 10p below 10k miles resulting in a tax refund of £200 is cancelled by the "profit" and so extra tax due on the next 10k still done at 35p and so 10p over the allowed limit resulting in £200 extra tax payable