HMRC Mileage Allowance

totalguitar

I understand the allowance is 45p for the first 10,000 miles and then 25p thereafter, but....

I am self employed working through an agency and I do not get paid for the first 100 miles per day, anything over 100 miles is paid at a flat rate of 22p per mile.

So if I do 70 miles in a day I get nothing, If I do 170 miles in a day I get 70 x 22p.

I will do around 25,000 this tax year.

Anyone got any clue on how to calculate the allowance I should get ?

Thanks in advance.

Dazed_and_confused

Anyone got any clue on how to calculate the allowance I should get ?


Isn't it 70 miles x 22p/mile?

If you want to be paid a different rate or for different miles wouldn't you need to find a different agency?

lisyloo

I understand the allowance is 45p for the first 10,000 miles and then 25p thereafter,

Wouldn't the allowance be

0.45 * 10000 + 0.25 * 15000 ??

laticsforlife

Simply take your total mileage for the year (25,000).

10,000 x 45p = £4,500
15,000 x 25p = £3,750

You got £2,000 in actual payments (example)

Take the £2,000 off the 'allowance' of £8,250 and you can claim tax relief on £6,250, and if you are a standard rate taxpayer that'll be worth about £1,250 I think.

TheCyclingProgrammer

laticsforlife wrote: »

Simply take your total mileage for the year (25,000).

10,000 x 45p = £4,500
15,000 x 25p = £3,750

You got £2,000 in actual payments (example)

Take the £2,000 off the 'allowance' of £8,250 and you can claim tax relief on £6,250, and if you are a standard rate taxpayer that'll be worth about £1,250 I think.

What OP gets paid for his services to the agency (which includes payments for mileage) is entirely separate from the tax deduction calculation.

OP is entitled to tax relief on the full 25k miles. There!!!8217;s no need to deduct anything. The £8250 gets deducted from their gross profits along with any other tax deductible costs when calculating taxable profits.

Any reimbursement they get from the agency for mileage is just treated as normal income and added to their turnover.

totalguitar

Dazed_and_confused wrote: »

Anyone got any clue on how to calculate the allowance I should get ?


Isn't it 70 miles x 22p/mile?

If you want to be paid a different rate or for different miles wouldn't you need to find a different agency?

It's not the amount that is the issue, it's just how to calculate how much tax allowance I can claim.

totalguitar

laticsforlife wrote: »

Simply take your total mileage for the year (25,000).

10,000 x 45p = £4,500
15,000 x 25p = £3,750

You got £2,000 in actual payments (example)

Take the £2,000 off the 'allowance' of £8,250 and you can claim tax relief on £6,250, and if you are a standard rate taxpayer that'll be worth about £1,250 I think.

Thanks, i'm paying 40% tax. So given your example would I just not pay tax on £6250 ? i.e deduct £6250 from profit and pay tax on the rest ?

totalguitar

TheCyclingProgrammer wrote: »

What OP gets paid for his services to the agency (which includes payments for mileage) is entirely separate from the tax deduction calculation.

OP is entitled to tax relief on the full 25k miles. There!!!8217;s no need to deduct anything. The £8250 gets deducted from their gross profits along with any other tax deductible costs when calculating taxable profits.

Any reimbursement they get from the agency for mileage is just treated as normal income and added to their turnover.

That makes sense, so I would deduct £8250 from profit, add anything received from the 22ppm and then pay tax on the rest ?

Tom99

totalguitar wrote: »

Thanks, i'm paying 40% tax. So given your example would I just not pay tax on £6250 ? i.e deduct £6250 from profit and pay tax on the rest ?

[FONT=Verdana, sans-serif]As TheCycling has pointed out, you are self employed so the £2,000 you get from your employer is just added to your other income. You then claim the full £8,250 as an expense.[/FONT]
[FONT=Verdana, sans-serif]The net is the same though.[/FONT]

GauisScotius

As a self employed person you are allowed to deduct all the expenses you incur in providing services to clients through the agency. This includes depreciation on your vehicle, insurance, maintenance, tyres, fuel, AA/RAC membership and so on. The HMRC realise that tracking all this can be a chore, so they allow people to use a standard deduction per mile (much discussed above) instead. The standard deduction, however, is not particularly generous; the actual cost of driving 25,000 miles is quite likely to be well above the roughly £8,600 allowance.

When you calculate your profit (ie your taxable income) you can either deduct the full cost from what you receive from the agency or the HMRC standard mileage allowance. Choose which ever gives you the lowest taxable income.

Tracking motor expenses can be a pain, but there are good smartphone apps out there that make it easier.

[Deleted User]

GauisScotius wrote: »

When you calculate your profit (ie your taxable income) you can either deduct the full cost from what you receive from the agency or the HMRC standard mileage allowance. Choose which ever gives you the lowest taxable income.

.

TheCyclingProgrammer has indicated the correct procedure i.e. add the amount received to turnover and deduct the full expenditure as an expense. You do not simply claim the difference as appear to suggest.