Mileage Allowance Relief- Help

Steppy1234

Hi,
I am looking for some advice for my daughter and what she can claim for Mileage Allowance Relief.
She works as a Children’s Support Worker and this involves using her car for business mileage. Work pay her 30p per mile travelled and informed her should be able to claim the extra 15p per mile from the tax man.
All her mileage has been recorded over the year and a form P87 was submitted. The form worked out that the “Total net allowable expenses you are claiming for the year” was £829.50 and my daughter took it that this was the figure she would be receiving from the tax man. (5530 business miles @ 45p= £2488.50. 30p per mile already paid £1659, difference being £829.50)
Nothing was heard after the form went in and she called them today to ask what was happening, and even though I don’t know exactly what was said, the main thing was she isn’t getting the total money back, just a percentage of it? And how much is linked to her tax code?
I have tried to look on the internet and I understand that Tax Relief is claimed on some out of pocket expenses, but surely this shouldn’t include mileage where the employer chooses not to pay the employee the full allowance?
Can anybody explain or help me understand this?
Thank you

LMG1305

From what I understand she doesn't get the additional 15p per mile, she gets the tax back on that amount, so 20%. So yes basically if the employer chooses not to pay the 45p per mile, she cannot claim the 15p per mile difference from HMRC, she can only claim the tax relief on it.


There's definitely a better way of explaining it than how I have just done, which I'm sure somebody more knowledgeable will be able to do soon.

antrobus

LMG1305 wrote: »

From what I understand she doesn't get the additional 15p per mile, she gets the tax back on that amount, so 20%. So yes basically if the employer chooses not to pay the 45p per mile, she cannot claim the 15p per mile difference from HMRC, she can only claim the tax relief on it.

There's definitely a better way of explaining it than how I have just done, which I'm sure somebody more knowledgeable will be able to do soon.

Your understanding is correct.

HMRC have an 'approved amount' of 45p a mile (for the first 10,000 miles) that an employer can pay in respect of business mileage without having to apply PAYE.

This is just HMRC making life easy; the actual cost per mile of running a particular car will almost certainly not be 45p a mile. It could be less, or it could be more, it all depends. Employers can please themselves as to what mileage rate (if any) they decide to pay. But if they pay less than 45p a mile, the employee can claim Mileage Allowance Relief on the 'shortfall'.

Steppy1234 wrote: »

.. All her mileage has been recorded over the year and a form P87 was submitted. The form worked out that the “Total net allowable expenses you are claiming for the year” was £829.50 and my daughter took it that this was the figure she would be receiving from the tax man. (5530 business miles @ 45p= £2488.50. 30p per mile already paid £1659, difference being £829.50)..

The £829.50 is the total of Mileage Allowance Relief, your daughter has claimed it as an allowable expense against her taxable income. Assuming she is a basic rate tax payer, she should receive £169.50.

That's the way it works.

Dazed_and_confused

She needs to be a basic rate payer and have paid sufficient tax to get the full benefit of the claim.

If she is low paid or part time (or both) and has only paid say £100 tax then she can only get £100 back.

I don't quite agree with antrobus's figures though. Even if she is a basic rate payer who has paid enough tax (and her tax code was otherwise correct) then I would think she's more likely to get £164, not £169.50.

She could ask her employer to explain this from your original post as it clearly isn't true (as explained in previous responses) but it could just as easily be due to a misunderstanding rather than deliberate misinformation on the employers part.

Work pay her 30p per mile travelled and informed her should be able to claim the extra 15p per mile from the tax man

In all honesty she could be worse off, there have been other posters on here who get paid nothing by their employer and others who have made a claim but receive no tax refund as their income is already so low they haven't paid any tax in the first place.

00ec25

Dazed_and_confused wrote: »

I don't quite agree with antrobus's figures though. Even if she is a basic rate payer who has paid enough tax (and her tax code was otherwise correct) then I would think she's more likely to get £164, not £169.50

LoL, you are both wrong, one due to an obvious typo ("transposition error"), and the other due to rounding

OP states 5530 business mile and so correctly calculates the net mileage expense claimable as £829.50

829.5 x 20% = 165.90

Dazed_and_confused

But the PAYE system of knocking the end digit of your tax allowance to create a tax code means we all end up owing a small amount at the end of the year which, for the op's daughter, will be taken into account when the actual tax position is calculated.

Standard code last year was 1100L so employers give allowances of 11009 throughout the year via the PAYE tax tables but when the tax is calculated only 11000 are actually due which results in a small amount of tax owed (£9 x 20% for basic rate payer) which will reduce the amount of repayment.

Steppy1234

Thank you all for your replies. I understand now, I can only assume someone has told her wrong about what she is able to claim back or she has misunderstood. She is only 21 and new to the working world and tax man. When I was googling this, I came across a 5p passenger allowance? due to the nature of her work, she does have to work in pairs and 9 times out of 10 ends up driving in her car. There is no record of this for the last tax year, but going forward if a record was kept, could this be claimed also? there was no mention of this on the p87 form. What sort of evidence would she need to keep?

bob_bank_spanker

Steppy1234 wrote: »

Thank you all for your replies. I understand now, I can only assume someone has told her wrong about what she is able to claim back or she has misunderstood. She is only 21 and new to the working world and tax man. When I was googling this, I came across a 5p passenger allowance? due to the nature of her work, she does have to work in pairs and 9 times out of 10 ends up driving in her car. There is no record of this for the last tax year, but going forward if a record was kept, could this be claimed also? there was no mention of this on the p87 form. What sort of evidence would she need to keep?

Whilst an employee can receive an extra 5p for journeys with a passenger tax free, you cannot claim relief if it is not paid, ie. the maximum relief that can be claimed is up to 45p/mile.