Paid Mileage - Cost To The Employer

oysterpearl

Hello,

My employer has historically paid me for the mileage I do for work purposes at the normal 45p rate.

The company is being taken over and it sounds as if the new owners may not pay me this in future.

Can anyone please tell if paying mileage to an employee actually costs the employer anything or is it just taken off the tax they would normally owe?

I tried looking online, but couldn't find a definitive answer.

Thank you!

Alter_ego

I hope it costs the employer. If not taxpayers are subsidising your employer.

Comms69

oysterpearl wrote: »

Hello,

My employer has historically paid me for the mileage I do for work purposes at the normal 45p rate.

The company is being taken over and it sounds as if the new owners may not pay me this in future.

Can anyone please tell if paying mileage to an employee actually costs the employer anything or is it just taken off the tax they would normally owe?

I tried looking online, but couldn't find a definitive answer.

Thank you!

It does cost them something yes, but obviously they also have expenses which are deductible.


Ultimately you can still claim tax relief at the same rate.

MataNui

It costs them. Think of it as any other tax deductible expense. They can pay you 45p per mile and claim all of that as a deductible expense for tax.

Employers typically pay you less than 45p (you also wont pay tax on this) and you can claim an allowance from HMRC against the balance up to 45p per mile.

Comms69

Alter_ego wrote: »

I hope it costs the employer. If not taxpayers are subsidising your employer.

Do you want to try again, or is that your final answer?

oysterpearl

Thanks for your replies. The company have always paid me the full 45p per mile and I've not been taxed separately on it.

Comms69

oysterpearl wrote: »

Thanks for your replies. The company have always paid me the full 45p per mile and I've not been taxed separately on it.

Because that's the HMRC rate....................

Dazed_and_confused

Ultimately you can still claim tax relief at the same rate.

Probably not intentional but that's possibly somewhat misleading.

Let's say the op travels 5000 miles

Current employer pays 45p/mile so op receives £2250

New employer pays, say, 30p/mile so op receives £1500 from the employer and can claim tax relief on £750 (5000 x 45p = £2250 less £1500 reimbursed by employer = £750)
If op is a basic rate payer this saves them £150 in tax so they have received a total of £1650, someway short of the current £2250

bap98189

oysterpearl wrote: »

Can anyone please tell if paying mileage to an employee actually costs the employer anything or is it just taken off the tax they would normally owe?

Yes it costs them something. It costs them the amount that they pay you. There is no magic tax deductible. Whatever they pay you comes straight off the bottom line as an expense.

If the company makes a profit and are liable for corporation tax then they will have made less profit because they paid your expenses. You could therefore argue that 19% of your expenses are offset against tax.

jobbingmusician

Yes, it does cost them whatever they pay you, on the face of it, but in reality it is a cost to retain the employee. No employee is going to do 1000 miles a week (for example) without their costs being reimbursed. The level of reimbursement is part of your overall salary/reimbursement package.

Speaking of which, let's rewind for a minute. 'The company is being taken over and it sounds as if the new owners may not pay me this in future.' Is there a union involved? Has anyone thought about TUPE? The whole point of TUPE is that if a company is taken over, terms and conditions are protected. (Yes, I know it's not as simple as this, but it's a good starting point!)

oysterpearl

jobbingmusician wrote: »

Yes, it does cost them whatever they pay you, on the face of it, but in reality it is a cost to retain the employee. No employee is going to do 1000 miles a week (for example) without their costs being reimbursed. The level of reimbursement is part of your overall salary/reimbursement package.

Speaking of which, let's rewind for a minute. 'The company is being taken over and it sounds as if the new owners may not pay me this in future.' Is there a union involved? Has anyone thought about TUPE? The whole point of TUPE is that if a company is taken over, terms and conditions are protected. (Yes, I know it's not as simple as this, but it's a good starting point!)

Thank you, I think I understand now

In regards to TUPE, yes our contracts are being transferred in this manner. However, my previous mileage agreement was just verbal between myself and my manager (although there are obviously records of me being paid expenses). The new owners haven't definitely said they won't be paying them in the future, but it was along the lines of "we'll have to see", so I just wanted to educate myself so I had a good argument if they say no.