Explain Mileage Allowance Relief

Cook_County

GARDINER wrote: »

Fengirl I'm afraid you are wrong the statutory way of claiming car expenses for employees is now by using the authorised rates of 40/25p

Please provide a statutory reference for this assertion.

GARDINER

Sections 197AD to 197AH and Schedule 12AA ICTA 1988 as introduced by Section 57 and Schedule 12 FA 2001, Sections 58 and 59 FA 2001

GARDINER

Or if it is easier for you Cook-County
http://www.hmrc.gov.uk/manuals/senew/SE31205.htm

daverowland

quick question please

currently reviewing the mileage thing...

if a director or an employee uses their car for 'business travel' then they can claim this 40p per mile (i think its against tax in PAYE?, haven't fully understood this)

Also, I understand drive to and from a place of work is NOT included, am I right?

stphnstevey

Yes and Yes

Its an expense to the business - employee (director) gets upto 40p (tax free as long as not more than 40p) a mile and company then claims this as a pre-tax expense before Corporation Tax is calculated. In effect double taxation relief!

huzzer84

I currently get reimbursed 40p per mile for first 10,000, 25p thereafter by my employer, in line with the HMRC allowances. However, I have a question about the actual number of miles that can be claimed.

My employer allows the shorter of the distance from home or office to client site. I live about 35 miles from my base office, and travel in all directions to various clients.

If, for example, I travel to somewhere 50 miles from home, but just 25 miles from the office, my employer will only allow me to claim 25, but am I entitled to 50 as this represents the journey that I have to make in the performance of my duties of employment?

inmypocketnottheirs

stphnstevey wrote: »

From a current employee who uses his own car for work, I think the mileage allowance is supposed to cover the running costs as well.

I am likely to start contracting via a Ltd - I will be doing alot of travelling and will need a car. I currently have a ersonal car I have been using whilst in perm employment. I am just trying to figure out the best way to run a car with this ltd.

I could sell the car to the ltd and then use it as a company car. It looks like I could claim back the running costs and there would be some capital gains benefit as a business asset. But as an employee I would be taxed on this benefit.

To make it complicated I might be claiming business miles via the clients expenses system.

Alternatively, I could pay myself a mileage allowance tax free and add an appropriate fee to the rate I charge.

What would be best?

If you sell the car to the LTD co then you will pay tax as a benefit in kind.

I run my own LTD co, and I run the vehicle out of my own pocket and pay myself the statutory 40/25p per mile. This I was advised by my accountant.

I do around 40,000 miles p.a. and this is a good way of getting money out of the company without paying tax.

Even more so now I make my own bio diesel and it costs me about 20p a litre!

dzug1

mhurren wrote: »

I currently get reimbursed 40p per mile for first 10,000, 25p thereafter by my employer, in line with the HMRC allowances. However, I have a question about the actual number of miles that can be claimed.

My employer allows the shorter of the distance from home or office to client site. I live about 35 miles from my base office, and travel in all directions to various clients.

If, for example, I travel to somewhere 50 miles from home, but just 25 miles from the office, my employer will only allow me to claim 25, but am I entitled to 50 as this represents the journey that I have to make in the performance of my duties of employment?

You cannot claim home to office travel against tax. Your employer could if he wished pay you for it but would have to tax you on it.

So you are regarded as having travelled to the office and on to the client.

cash99

mhurren wrote: »

I currently get reimbursed 40p per mile for first 10,000, 25p thereafter by my employer, in line with the HMRC allowances. However, I have a question about the actual number of miles that can be claimed.

My employer allows the shorter of the distance from home or office to client site. I live about 35 miles from my base office, and travel in all directions to various clients.

If, for example, I travel to somewhere 50 miles from home, but just 25 miles from the office, my employer will only allow me to claim 25, but am I entitled to 50 as this represents the journey that I have to make in the performance of my duties of employment?

The rules relating to what distance can be claimed are here http://www.hmrc.gov.uk/manuals/eimanual/EIM32300.htm in the example you quote you could claim the full 50 miles. The only restiction that applies is if the business journey is substantially the same as the normal commute. i.e visiting a customer directly from home who is located a mile from your own office. In this case no tax relief would be due and if your employer re-imbursed you for the 1 mile journey it would be taxable.

Many employers seem to have this deduction for home to office mileage, in some cases it dates back to very old tax rules which only allowed tax relief on the difference between the business journey and the normal commute.

cash99

dzug1 wrote: »

You cannot claim home to office travel against tax. Your employer could if he wished pay you for it but would have to tax you on it.

So you are regarded as having travelled to the office and on to the client.

not correct see my post above