Home based worker, business mileage tax benefit.

Pauli354

I am home based , and service and visit my accounts from home. . I get business mileage paid on my own car for business use, what way will I stan in claiming tax relief of business miles? I know I cannot claim home to work, but this is not the situation I am in, as when I travel from my home, it is my workplace, and I am travelling to service my accounts.

dori2o

00ec25 wrote: »

what mileage rate does the company already pay you?

what does your contract of employment state is your work location? To be home based your contract has to say that in black and white.

This is the important bit when it comes to these mileage claims.

It must be a condition of the contract that you are a home based worker. Neither you, nor the employer for that matter, can simply agree to you being a home based worker because it is easier for you/them for you to travel from home to your clients.

When making your claim, although the forms clearly state that you don't have to send in any evidence, I would suggest providing a copy of your contract which states you are a home based worker, and also providing a mileage log.

In my experience, although the form does not request it in most cases the officer dealing with the claim will want to see it.

If your claim is going to be for more than £2500 then don't bother making the claim on a P87, or by sending a letter. Claims for expenses in excess of £2500 have to be made on a tax return. Simply register for self assessment via the Gov.uk website and fill in a tax return.

In these cases the rules are different and no proof is required unless you are specifically requested to provide it in the course of a check of your return.

However, it would be rather silly to claim for something there is no entitlement to.

If your contract does not confirm that you are a homeworker, but your employer is happy with the arrangement, then you could speak to your employer regarding this with a view to amending your contract for future years.

Pauli354

Im paid .12ppm and can claim relief on .45ppm for the first 10k business miles, and .25ppm after that (less what I am paid by my employers, ie .12ppm)

I'm 15 years at the company . Not sure what my contract states, its so long ago, but it was always a home based job from day 1. Obviously we have an office in support functions, but its 600 miles away so couldn't base there even if I wanted, and I am part of a field team.

Pauli354

Few other questions,
1. I've estimated my mileage tax benefit claim will be approx £2300 (thats 40% of the total allowance of over £5k). Can I claim that on the P87, or will I have to complete a full self assessment. Im not sure if the £2500 limit before sell assessment is for the claim amount (£2300), or the full amount of relief before tax (+£5k)?

2. Obviously on completion of this first tax year I will be claiming a lump sum for the tax year just completed, ie 18/19. I've heard after the first claim year), an adjustment can be made to my tax code to allow me to receive the tax benefit monthly (with any variance rectified by the next self assessment, would that be right?

3. Dori20, if I am reading you right, are you saying I only need to send in a mileage log if Im completing a P87, but not if I am doing a self assessment? I thought it was compulsory in all events.

Dazed_and_confused

Which form
Gov.uk states,

Only fill in this form if your allowable expenses are less than £2,500 for the year.

You aren't "claiming" £2300, you are claiming expenses of £5k+ so you would need to register for self assessment.

Tax code
Pretty sure this is correct. The information on your tax return is used to keep your current tax code upto date

Mileage log
I think the basic difference is that with a P87 HMRC will review/check your claim before paying out. Under Self Assessment they pay out and have a year to ask you about the return. So if your claim is checked and found to be excessive, not due etc then you might have to pay back some or all of any repayment you receive. A mileage log would be useful evidence to support your claim but you don't have to send it in with your tax return.

Pauli354

Thats what I suspected. Ta.

Pauli354

00ec25 wrote: »

1. the claim is for the expense you incurred, ie amount before tax relief, so 5k and thus welcome to the world of tax returns

2. tax codes are not automatically adjusted from claim amounts over £2,500. Hence you do a tax return for those sums and can then ask for a tax code adjustment or for a refund, your choice.

3. as Dorio said: when sending a tax return you don't send anything at all


Why are you "suddenly" claiming after 15 years? The chances of you being challenged are low as HMRC has many people to pick on so why would they pick you. That said if they do challenge you I'm still far from convinced you won't fail some of the now well established case law over travel costs for people working regular repeat patterns in "areas"

have you read Expenses 490?
https://www.gov.uk/government/publications/490-employee-travel-a-tax-and-nics-guide

paras 3.32 - 3.39 & 3.45 for example.

Im moving from a company car to a car allowance by choice. I'm not concerned about being "challenged" as such, its all above board and I've nothing to hide. I'm also not afraid of self assessment, I used to do it regularly before starting this job, and if anything its more straightforward now. There are other guys in the same position in my company but I haven't had a chance to catch up with them yet to see how they manage it.

What I do know is, that my company has always paid me business mileage at .12p from my home office to wherever I visit that day in the course of business. So my mileage would be recorded and paid from the format:

01/01/18 Home office to Business 1 Manchester 100 miles @12ppm.
02/01/18 Home Office to Business 2 Bolton 112 miles. @12ppm
03/01/18 Home Office to Business 3 Liverpool 150 miles. @12ppm

Ultimately, my home is my workplace and has been from I started here, I've never been office based with this company, so when I drive my car to go to Joe Bloggs Limited etc, I am on business miles from the moment I leave the house until I return. If thats not confirmed business mileage, then at what point is the sometimes 200 miles I travel in a day to upwards of 6 accounts actually classed as business mileage?
There are many field based workers out there doing the same. The HMRC site doesn't refer to this work situation at all as far as I can see.

I keep and will still be keeping mileage logs as I need these to claim the 12p per mile allowance monthly from my company. I'm surprised HMRC don't need to see it, but it will be there if they ever did.

Cheers for the link, Ill have a read at that

Pauli354

00ec25 wrote: »

1. the claim is for the expense you incurred, ie amount before tax relief, so 5k and thus welcome to the world of tax returns

2. tax codes are not automatically adjusted from claim amounts over £2,500. Hence you do a tax return for those sums and can then ask for a tax code adjustment or for a refund, your choice.

3. as Dorio said: when sending a tax return you don't send anything at all


Why are you "suddenly" claiming after 15 years? The chances of you being challenged are low as HMRC has many people to pick on so why would they pick you. That said if they do challenge you I'm still far from convinced you won't fail some of the now well established case law over travel costs for people working regular repeat patterns in "areas"

have you read Expenses 490?
https://www.gov.uk/government/publications/490-employee-travel-a-tax-and-nics-guide

paras 3.32 - 3.39 & 3.45 for example.

From what I can see here, no example under 3.32 reflects my position. I would fit in to 3.34 more readily as I live and work within my geographical area:

3.34 An employee whose duties are defined by reference to a particular geographical area is
entitled to tax relief for:
• the full cost of business travel made within the geographical area
• the full cost of business travel to other workplaces outside the area
Example
Hope lives in Perth and is employed by a Scottish utility company. She has no office and
her duties are defined by reference to the whole of the geographical area of Scotland
which is her permanent workplace.
Sometimes Hope has to travel long distances within Scotland and occasionally she goes to
London on business. This often involves meals while travelling and staying in hotels. Hope
is entitled to tax relief for these travel costs in full.

Also, 3.37 would apply:
Where an employee performs substantive duties of their employment at home as an
objective requirement of the job, we may accept their home as a workplace for the
purposes of the ‘travelling in the performance of the duties’ rule (go to paragraph 2.5).
Where this is the case the employee will be entitled to tax relief for the expenses of
travelling from home to other workplaces as their travel is in the performance of
their duties.
Usually, we’ll only accept that working at home is an objective requirement of the job
if the employee requires certain facilities to perform those duties, and those facilities are
only practically available to the employee at their home. We won’t accept that working
at home is an objective requirement of the job if the employer provides appropriate
facilities in another location that could be practically used by the employee, or the
employee works from home as a matter of choice.
Example
Angela is an area sales manager who lives in Glasgow. She manages the company’s
regional sales team across Scotland. As the company’s nearest office is in Newcastle Angela
cannot practically attend that office and is required to carry out her administrative work at
home. Angela’s employer requires her to keep all client information securely at home, and
so Angela could not carry out that administrative work anywhere else.
Angela is entitled to tax relief for the expenses she incurs in travelling from her home to
the company’s office in Newcastle, as well as for her journeys within Scotland.

Pauli354

00ec25 wrote: »

the days when HMRC employed tax inspectors who had the time to check supporting documents for each return are long gone

nowadays it is called SELF assessment for a reason - you claim what you are entitled to claim having understood the rules and claimed only what you can

a small % of tax returns are still inspected every year on a random basis, hence the need to maintain your own records if picked since you will then be challenged to evidence your claim and if you can't you will be crucified as an example to others

don't get me wrong, I think your status is OK, but your tone of complacency is unsettling, hence me pointing out the grey areas around being home based. Visiting clients over the course of >2 years is something you need to understand so you can answer the questions if need be. Hence read the paras indicated as they will confirm your compliance with a pattern of repeat temporary workplaces of <40%

I accept what you say regarding the mileage records. I only asked because most sites I checked on indicated I would need to send these in with the claim. Great if thats not the case with Self assessment unless they decide to spot check.


I'm certainly not complacent, I don't know how you can read anything Ive said in to that. I do however try to thing things through logically and take as much 'noise' out of the situation as I can.
I think as posted earlier section 3.34 and 3.37 seems closest to my situation as the examples are nearest to my work situation. I cannot work from the office for geographical and distance reasons, its impossible and impractical. I am a home worker through necessity, networked to the main office via PC. Angelas example is a virtual carbon copy of my situation .

This is my first query on the subject, I plan to call the tax office for full clarity and confirmation, but given the large company I work for and the near 250 people employed in my role I doubt there will be a problem, but there may need to be clarification to the tax office from my employer.

Legurion

I know that with mileage expenses you can’t claim mileage for your usual commute if you are based at an office.
However due to Covid 19 I have to work from home. I still have to go out and see people. Do I claim mileage from my home or do I only claim above my usual commute to the office?

unholyangel

Pauli354 said:

Im paid .12ppm and can claim relief on .45ppm for the first 10k business miles, and .25ppm after that (less what I am paid by my employers, ie .12ppm)

I'm 15 years at the company . Not sure what my contract states, its so long ago, but it was always a home based job from day 1. Obviously we have an office in support functions, but its 600 miles away so couldn't base there even if I wanted, and I am part of a field team.

One thing to watch out for that might apply given the part in bold (and depending on your job/contract of employment):
https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32190