Car Allowance - Tax Relief P87 Form

techno94

Hi everyone,

I have managed to confuse myself while trying to complete a P87 form for the use of my own vehicle for business miles. I do not receive a mileage allowance as such (e.g 40p per mile), but instead receive £400 per month car allowance, plus a fuel card on which I pay tax for my private mileage. Assuming that I am eligible for tax relief, for the section of the form 'Total mileage allowance payments received from your employer' should I insert the total amount of car allowance payments received for that tax year??

Thanks

00ec25

you need to start again

1. forget about the car "allowance". That is simply extra salary that is paid to you and subject to income tax and NI as part of your payslip. ignore it

2. you say you have a fuel card. So that means the company pays 100% of the fuel you use for business.

3. you say you pay tax on private use. Therefore the company must know a) the total mileage you did that month and b) how much of it was business and/or private mileage so they can calculate how much of the fuel cost they have paid for relates to your private fuel use.

Understanding that is what you need to focus on... you need to:

i) calculate how much the company has spent on your business use
ii) work out how many business miles you did that month
iii) multiply the business miles by 45 pence per mile (or 25ppm if you have done >10,000 miles in the year)
iv) deduct £ in calculation iii) from what the company has paid. If the mileage based calculation is more than the company has spent then that is the actual £ amount you claim

what you do not seem to have understood is you can only claim for your business use and part of that has already been paid to you because the company paid for the fuel. Your tax expense is therefore the difference in monetary amount
example. if the company has paid for £100 of fuel and you have driven 500 business miles then your expense claim would be:
500 x 0.45 = £225 - £100 = £125 to claim
your tax refund ("tax relief") would be £125 x 20% = £25 (or if a 40% taxpayer = £50)