Company car help

harni2013

Hi all,
I’m after a little advice as I have been reading conflicting information about this over the past few weeks

The story goes that I have been working for the same company for the past 7 years and during this time have always had a “fit for purpose” company car. Most of those years I have been an on the road engineer so had basic estate cars.
I have been offered a role off the tools recently which will put me on 42k a year but instead of a company car, comes with cash for cars. Having had a chat with HR, I could negotiate keeping my company car in the new role possibly but this would be down to the HR director and finance director deciding seeing as it’s not offered with the role.
In the new role I will be doing roughly 20k miles a year private and business combined and if I take the cash for cars, is worth £4500 a year which at 40% I work out to be about £217 a month after HMRC have had their bit. Work will also pay 0.18 a mile on business miles.

I am keen to go for the cash for cars. I’ve wanted a nicer car for a while and as a result are happy to put a little of my own money into the car per month and have found a few which I would want.
What I am not sure about is the claiming back from HMRC of the difference in mileage payments. I understand it’s 0.45 for the first 10k (so I can claim 0.27 from HMRC) and then 0.25 there onwards (so 0.07 for me). Let’s say In my scenario I do 20k in a year. That’s £3600 from the business, £2700 for 10k from HMRC and £700 for the remainder. What I don’t understand is, do I actually get £2700+£700 back from HMRC or do I get the tax relief back which would be £1080+£280?
My second question is, I am aware I will get this payment back via tax relief and not a direct payment but do I have to wait until the end of the financial year to submit a self assessment? So in effect HMRC will be in a years arrears with me?

Sorry for what is potentially stupid questions but I’ve always been rather poor at understanding HMRCs ways!

sheramber

You cannot claim for private mileage including commuting so you would not be claiming for 20k miles if you do 20k for business and private combined.
You need to keep and record of your business journeys and the mileage.

You will need to register for self assessment if your total expenses are more than £2500.

You only get tax relief , not the full amount back.

jimmo

To answer your questions you will get tax relief on your expenses claim, not the full amount. HMRC will normally want to see your first annual claim before considering a coding allowance so you will probably have to wait until 2019.
Can I point out that for 2018/19 the higher rate threshold is £46,350 so, unless you have other sources of income, you are unlikely to be liable to higher rate tax once your expenses claim is taken into account.
https://www.shorthousemartin.co.uk/income-tax-rates-and-allowances
On your figures for salary and car allowance you would pay 40% tax on £150 via PAYE during the year but, presumably you will not be starting the new job immediately so the salary for the tax year will be a little less and you will fall below the higher rate threshold once you can make your expenses claim.
Just one further thought. Whilst it is mathematically correct to say you can claim expenses of 27p and 7ppm, when you complete your tax return you will need to declare the mileage allowance received from your employer in one part of the Return and claim the full 45p and 25ppm in another.

harni2013

Many thanks for the help. I wasn!!!8217;t aware that the higher tax threshold was increasing. In fact, I!!!8217;m so useless with this stuff I thought it was £34k and above. I!!!8217;ve just realised I wasn!!!8217;t taking the tax free allowance into account so that!!!8217;s good news all around!
I!!!8217;m happy to not receive anything from HMRC in the first year as I had expected that anyway but one more question, what would they require as proof of the mileage? At present I keep all of my fuel receipts and I keep a mileage log of how many miles I have done each day split into business and personal. Would this be satisfactory?
Finally, claiming for commuting. I am a field/Home based employee but on occasion do have to travel to our offices for meetings. As in my contract I am field based, would this journey class as commuting and thus not claimable?

jimmo

From a tax point of view I don't see much point in keeping fuel receipts. It was different years ago but nowadays, for employees, everything is based on mileage and the price you pay for fuel is irrelevant.
It was always my experience that the mileage records required by employers were more than adequate for tax purposes so I would think your current system is fine. However it all depends on your individual circumstances. If, for example, you live in Manchester and all your clients/customers are in Manchester, your mileage log needs to be far more detailed than someone who can say " Monday, home, Tuesday Manchester, Wednesday Glasgow...
On commuting, that is probably the most difficult question you have asked. I would suggest that if tax is not your thing it would be safer to regard your journeys as commuting, not allowable for tax purposes but if you are up for a fight with HMRC you could argue that "our offices" are a temporary workplace so that your travel there is a business journey. Start here and follow all the links.
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32160