Car Allowance from Work - Mileage Expenses...

MataNui

Its not a company car. The fact you get an allowance for the car is irrelevant. Its treated as normal salary for tax purposes. VAT is also irrelevant. Your employer is confusing you (and probably themselves over the definition of a company car) and the answers you are getting here (probably because you are muddying the question) will just make it worse.

Your car is treated as a personal car. Its paid for by an allowance that as far as anyone (employer and tax man) is concerned is treated as salary and thats it.
There is no fixed rate an employer must pay. Its up to them.
They can pay you 45p per mile without you needing to pay any tax on that (they also get tax relief on that).
They can also just pay you a nominal amount (as they seem to be doing in your case though that may be because they dont understand the definition of a company car).
You can claim the balance (between the 11p and 45p from the tax man).

k3lvc

MataNui wrote: »

You can claim the balance (between the 11p and 45p from the tax man).

Just to be clear - the OP can claim tax relief on the difference between 11p and 45p

mike_sedge

MataNui wrote: »

Its not a company car. The fact you get an allowance for the car is irrelevant. Its treated as normal salary for tax purposes. VAT is also irrelevant. Your employer is confusing you (and probably themselves over the definition of a company car) and the answers you are getting here (probably because you are muddying the question) will just make it worse.

Your car is treated as a personal car. Its paid for by an allowance that as far as anyone (employer and tax man) is concerned is treated as salary and thats it.
There is no fixed rate an employer must pay. Its up to them.
They can pay you 45p per mile without you needing to pay any tax on that (they also get tax relief on that).
They can also just pay you a nominal amount (as they seem to be doing in your case though that may be because they dont understand the definition of a company car).
You can claim the balance (between the 11p and 45p from the tax man).

We have been having the same conversation at work recently

What i can't seem to get my head around is -

I understand that if company 'A' decides to pay only 11p per mile for car allowance staff, then staff are able to claim back the tax relief on mileage amount difference.

My question is, where is the money coming from to pay the VAT relief on the different between the mileage? And why should a decision by company 'A' to pay only 11p per mile mean a member of staff can claim taxrelief?

System

mike_sedge wrote: »

And why should a decision by company 'A' to pay only 11p per mile mean a member of staff can claim taxrelief?

Because HMRC rates specify 45p per mile for the first 10,000 miles, 20p per mile thereafter so if your employer pays less than this you can claim tax relief on the difference by submitting a P87 Expenses in Employment at the end of the tax year.