Grey fleet allowance, tax and business mileage claim

aabs

I have searched many threads on this subject but the more I read the more confused I become.

I receive a car allowance of £5100 pa
Tax code 2016/17 = 1092L
The company supplied me with a fuel card which I use for fuelling the vehicle which it then deducts the total fuel receipts from my salary each month with the expense claim for the business mileage I have made during that month reinbursed to me at a rate between 10pp to 13pp dependent on fuel prices during that month.

For example,
I may have £250 of fuel receipts for the month and submitted 2000 business miles.
Therefore my payslip would show a deduction of £250 for fuel and a payment £200 for grey fleet business mileage,
if for example 10pp was the rate for that month.

Recently my employer fitted vehicle trackers to all company vehicles and grey fleet vehicles and is now using the data reported from the tracker system to work out the business mileage payments.

Now that they have started to use this method the vehicle tracker always reports a lesser reading than my odometer reading and hence I feel as though I'm now subsidising my business mileage. A grievance was raised but rejected on the grounds that the GPS tracker is correct and all odometers have a degree of inaccuracies.

Given the allowance I receive and business pence per mile I am paid I'm looking at the costs very closely but don't want to cause trouble with my employer.

I have the option to return the fuel card and pay for my own fuel but the pence per mile will be calculated in the same way as the rest of the fleet so I can't see a benefit with doing that apart from maybe a little cash back if I chose the right credit card.

Given the facts that I receive a cash car allowance and a reduced pence per mile from the HMRC recommended 45pp am I entitled to claim any tax relief ?

I have been a grey fleet driver for 3 years now and never claimed any tax relief and I have spoken with many of my colleagues who have also not made any claims as they seam to think the car allowance is the difference between the 10pp and 45pp. Is it possible that the company could already be claiming the tax relief before payment to me.

I hope someone can explain this and help me understand this better??

booksurr

1. Tax Code: your company recovers the full cost of all fuel you buy by deduction from your salary. Therefore the company is not covering the cost of any non business miles you do so it is unclear why your tax code is 1092 rather than the standard 1100.

do you get medical insurance or other taxable benefits?
do you owe back taxes and these are being collected by lowering your tax code?
mathematically you are being taxed on a benefit worth £80 (11,000 - 10,920 =80)

2. Mileage: you are entitled to claim for the difference between 45ppm (on first 10,000 business miles, 25ppm thereafter) and what the company pays you

given the company rate varies each month the simplest method to use is :
a) total business miles done in the year (@45ppm or 25ppm as applic)
LESS
b) total £ paid to you as mileage

so in your example you did 2,000 miles and received £200
your cost claim would be (2,000 x 0.45) - 200 = £700

please understand HMRC refund the tax you paid on your cost so assuming you are basic rate taxpayer you would get 700 x 20% = £140

you can submit a claim for up to the previous 4 tax years so you can indeed claim the 3 years you have been doing this. Note however that it is one Form P87 for each separate year and if the total "cost" for a year is more than £2,500 you cannot use the form as you must instead submit a full tax return

https://www.gov.uk/tax-relief-for-employees/how-to-claim

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/PersonalTax_iForms/1.0/P87&template=P87_en_1.2.3.xdp

3. Company claim: there is no way that your company is claiming the tax relief, as the relief is for a person, not a company and even the most incompetent company finance person cannot be that ignorant of mileage as this is core stuff for any finance clerk

4 GPS odometers are inaccurate, just the same as a speedo reading is inaccurate. Sadly for you therefore the GPS would be regarded as the definitive mileage you did, although the difference should not be great unless your company is using different start and end points to what you think they should be

aabs

Hi booksurr

You are correct my current code is due to a health scheme.

Thank you so much for the advise given in your post and the links you have kindly provided.

Today I quizzed more colleges and found out that some employees had claimed successfully in the past but then had to pay the money back again due to the company having an arrangement with the inland revenue regarding the the difference being given within the car allowance somehow.

I don't disbelieve my colleges but is such a arrangement possible I do work for a very large company with circa 70k worldwide employees.

How can I check that such an agreement does exist rather than finding out by making my claim only to be contacted by the revenue at a later date to pay the money back ?

booksurr

aabs wrote: »

Today I quizzed more colleges and found out that some employees had claimed successfully in the past but then had to pay the money back again due to the company having an arrangement with the inland revenue regarding the the difference being given within the car allowance somehow.

I don't disbelieve my colleges but is such a arrangement possible I do work for a very large company with circa 70k worldwide employees.

How can I check that such an agreement does exist rather than finding out by making my claim only to be contacted by the revenue at a later date to pay the money back ?

given the size of your employer then surely asking your payroll dept or HR is the best bet since they will obviously know the details of any agreement they have with HMRC. I had previously assumed you worked for a small company with a skeleton or outsourced finance staff. A global player like yours will have HR policies that explain it, it has to.

Make sure if you do get any info it clearly explains how such a payment is itself treated for tax because if it is added into your car allowance then you are being taxed on that element which should be tax free, given it is a tax rebate to start with, which is why I find the whole idea unlikely. They must have a very sophisticated payroll system that only taxes a proportion of your car allowance for it to work correctly. A proportion which would change month to month from what you say about the rate varying between 10p - 13p

are you sure that your tax code reduction of £80 covers the full heath benefit? Could there have been a netting off with an "average" fuel allowance to reduce your extra taxable amount by only £80?