Claiming Business Mileage

willpatey

I'm hoping someone can help advise on my current, very complicated, scenario regarding business mileage and claiming tax back on said mileage.

I run my own car and use it for business use. I have a company credit card for which I can use to purchase fuel for my car. At the end of the month I complete an expenses report that details my business and personal mileage. My employer then charges me back my personal mileage at 12p per mile which is taken from my net salary.

What I want to know is if I can claim tax relief on the business miles that I do? I understand about AMAP rates and 45p allowance but is that affected by the fact that my employer pays up front for my fuel then charges back my personal mileage?

Any help would be greatly appreciated.

Thanks in advance!

[Deleted User]

I have read this more than once and it seems to me that your employer is reimbursing you for all of your business mileage. It is an unusual way to do it but you could argue that you are still 'out' the depreciation and repairs costs. Can we establish exactly what rate you are being paid per business mile from the calculations?

Pennywise

Your employer is paying for fuel for business journeys, but you're getting nothing for the other costs, i.e. repairs, depreciation, road tax, insurance, etc.

HMRC's mileage rate is 45p per mile, but that includes everything. What you need to do is deduct the official HMRC "fuel" rate for your car and claim back the difference. I..e. if the fuel rate was 12p, then you could claim 32p per mile for business journeys. You don't get the full 32p but you do get tax relief on the 32p, i.e. usually 20%, against your tax.

BoGoF

Does your employer report the business mileage spend on the company card as a taxable benefit on P11D

redpete

I dont think it is very complicated. The amount you get for your business mileage is the amount you spend on the fuel card less the 12p a mile for personal use. You can claim the difference between this and 45p a mile for business use against tax.

Let's say 8000 miles total, buy £1000 of fuel on the card.
3000 miles personal use gets you £360 leaving £640paid bythe company for the 5000 business miles.
45p a mile for 5000 miles is £2250. You can claim tax relief on £2250 - £640 or £1610, so you would get back about £320 if you are a 20% tax payer.

(Probably)

willpatey

So as I understand it from the above there seems to be two options, see examples below:

Example 1

Minus the 11p per mile paid for personal mileage from the HMRC 45p:
45p minus 11p = 34p
Netted down (40% tax) = 13.6p
Jan Business miles = 720
Total Jan Claim = £97.92

Example 2

Total Fuel Cost less personal mileage cost divided by business mileage to get business mileage rate to deduct from HMRC 45p:
Jan Total Fuel Cost (Total miles: 1501): £150.64
Personal Mileage Pay Back (Personal miles: 781): £85.91
Total Business Mile Cost (720 miles): £64.73
Therefore business cost per mile is 8p
HMRC 45p less 8p = 37p
Netted down (40% tax) = 14.8p
Total mileage claim for Jan = 14.8 x 720 = £106.56

Any comments on either of these examples would be most appreciated.

Thanks in advance.

Dazed_and_confused

You might want to rework example 1.

My calculator has 45 - 11 as 34, not 33.

willpatey

Dazed_and_confused wrote: »

You might want to rework example 1.

My calculator has 45 - 11 as 34, not 33.

Thanks! I was originally working off 12p and forgot to change the difference.

BoGoF

I think you are overcomplicating it.

At the end of the tax year your employer should report the amount spent on the credit card minus what you have paid back as a taxable benefit on form P11d. Lets say this is £5000.

Your mileage for the year is 15,000 so using HMRC 45/25 ppm per mile this gives tax relief due on £5750.

Net effect is tax relief due on £750

willpatey

BoGoF wrote: »

I think you are overcomplicating it.

At the end of the tax year your employer should report the amount spent on the credit card minus what you have paid back as a taxable benefit on form P11d. Lets say this is £5000.

Your mileage for the year is 15,000 so using HMRC 45/25 ppm per mile this gives tax relief due on £5750.

Net effect is tax relief due on £750

The problem is I am really talking hypothetically at the moment as I am currently in a company car so the above wouldn't show on my P11D yet. I'm moving into my own vehicle in April hence why I am looking into.

BoGoF

Keep it simple - dont be trying to convert the business fuel spend to some figure of mileage allowance to be deducted from the 45ppm. It won't work.