Mileage Allowance Rebate Help

M444

Hi All,

At my work we are provided with a £350 monthly allowance towards the costs of financing a car to be used for work (a Sales role). Company mileage is claimed back at a standard 25p per mile.

The company offers access to an optional lease scheme via a 3rd party which is paid for as salary sacrifice. The type and cost of car is totally up to us, as we pay the full cost financed by the allowance. So I get a £350 going in, which I am taxed on, then £600 going out before tax for the car.

I understand this is a BIK so I get the company car tax. However I had been led to believe this was not fully classed as a company car and as such I could claim the Mileage Allowance Rebate up to 45p? My colleague successfully gets it and has a relation who is a tax advisor and did all the forms! Yet when I claimed it was rejected as I "had a company car for the period". Trying to contact the HMRC or the lease company didn't leave me any more enlightened!

It doesn't help that my company made a royal mess of the P11Ds for that and the private medical so my tax is all over the place.

So I guess my question is - in this arrangement is this classed as a company car or not for a MAR?

Thanks in advance

DJMitchell

"I understand this is a BIK so I get the company car tax"

It all depends on who told you that and why.

The logic of a Benefit in Kind being taxed is to stop companies offering benefits instead of pay in order to avoid tax and NI. In your case it sounds like your employer actually pays you more taxable pay rather than less. Everything else is done via salary sacrifice as it would be for anyone using that scheme even if they never used the vehicle for work.

The question that needs to be asked is how does your employer pay you that £350 each month? do they add it to your gross pay or do something else?

Chances are they add to gross and to have a company car then there must be some change to your contract saying you've got one.

If the £350 is on the gross and you don't have it in your contract then its not a company car and therefore it sounds like those responsible at work have added it to the P11D incorrectly which could also mean you're paying tax on the £600 per month car (as well as paying it on the £350 contribution)!

Get your last payslip and post in here
1. Your pay details ie what is shown as salary,
2. what (and where) the £350 is shown as.
3. Your taxable pay
4. Your tax code

M444

Thanks for the help

They show as the following.

Salary / £3,166.67
AE Sacrifice / £-95
Car Allowance / £350
Sacrifice Life Assurance / £6.42
Sacrifice Car Lease / £-620.81

Total / £2,807.28

Tax / £603
National Insurance / £252.63

Net Pay / £1,951.65

My tax code is K164. I have a negative tax free allowance due to mandatory medical insurance and the car. Plus the company messed up the P11D more than once meaning I inadvertently underpaid tax.

There is no mention of the car allowance in the contract from what I can see, our company has changed a lot through mergers so the roles have changed several times. We just started receiving it and told that the new mileage rate would be 25p/mile. Employees are free to use their own car (as long as under a certain age and 4 seats), but there was the option of salary sacrifice through TCH Salsa. I like to think of myself as savvy but at the time I had not fully understood the tax implications, they did not explain it properly. But when the car arrived Salsa sent a template letter for us to send to the tax office stating the value and emissions of the car.

Caz3121

do these help (or add to the confusion)
http://www.pendragonvehiclemanagement.co.uk/news/HMRC-clarifies-Salary-Sacrifice-Car-Scheme-Tax/
https://www.fleetnews.co.uk/fleet-management/salary-sacrifice/car-salary-sacrifice-fact-or-fiction

zagfles

You are sacrificing salary and in return the company pays for your car. So it's most definitely a "company car" as far as HMRC are concerned. If it wasn't, there wouldn't be a BIK tax on it. So no, you can't claim mileage allowance relief.