Tax Return with Car Allowance

Mneil5

My work pay me a car allowance and also reimburse the cost of business miles fuel at the approved mileage rates I.e. 12p/mile for my car. Since I get a car allowance payment, am I still entitled to the 45p/mile HMRC rates for using my own car for business purposes?

Car_54

The 45p is supposed to cover depreciation, insurance, servicing etc. So is your car allowance. So, no,

foxy-stoat

Mneil5 wrote: »

My work pay me a car allowance and also reimburse the cost of business miles fuel at the approved mileage rates I.e. 12p/mile for my car. Since I get a car allowance payment, am I still entitled to the 45p/mile HMRC rates for using my own car for business purposes?

Yes, you claim the tax relief for the difference at the end of the tax year, assuming you don't drive more than 10,000 business miles.

theatretony

Car_54 wrote: »

The 45p is supposed to cover depreciation, insurance, servicing etc. So is your car allowance. So, no,

Completely wrong.

I have the same set up, I get 17p per mile and a car allowance, I can claim the tax difference on 28p per mile (45-17) for the 1st 10000 miles then 8p per mile on the miles after that (25-17)

Bigphil1474

OP, the mileage rate and monthly (or annual) allowance need to be combined to see if you are getting more than or less than the 45p per mile you drive that HMRC allow. e.g. If you do 10,000 miles a year, you can receive up to £4,500 a year in mileage + allowance before tax is due. If you get more than that, then your tax free allowance will be reduced the following year in order for the additional tax to be claimed back. If you get less than that, you'll probably get a refund at some point if you are PAYE.
Years ago we used to get less than the HMRC rate overall and I'd get a cheque around November for a few peanuts. Now we get more - roughly 79p a mile (combined lump and mileage) on 2,500 miles a year so my tfa is reduced.
Basically, if your employer multiplies the number of business mile you travel each year by 45p, then that's what you can get tax free.

Nearlyold

Bigphil1474 wrote: »

OP, the mileage rate and monthly (or annual) allowance need to be combined to see if you are getting more than or less than the 45p per mile you drive that HMRC allow. e.g. If you do 10,000 miles a year, you can receive up to £4,500 a year in mileage + allowance before tax is due. If you get more than that, then your tax free allowance will be reduced the following year in order for the additional tax to be claimed back. If you get less than that, you'll probably get a refund at some point if you are PAYE.
Years ago we used to get less than the HMRC rate overall and I'd get a cheque around November for a few peanuts. Now we get more - roughly 79p a mile (combined lump and mileage) on 2,500 miles a year so my tfa is reduced.
Basically, if your employer multiplies the number of business mile you travel each year by 45p, then that's what you can get tax free.

Sorry but that's not correct - the Car Allowance and Mileage payments are not combined

1) A "Car Allowance" (ie cash paid to the employee for them to lease/buy their own car rather than providing a Company Car) is taxed as salary income so is subject to both income tax and NI.

2) As far as HMRC is concerned re mileage, the employee is using their own car for business purposes. Employers can pay up to 45p per mile for the first 10,000 miles pa and 25p per mile after that - there is no further liability to tax for the employee if those rates per mile are not exceeded.

3) If the employer pays less than the maximum tax free rate per mile the employee can claim tax relief on the difference so in the OP's case 45p -12p = 33p therefore tax relief on 33p is 6.6p @ 20% tax or 13.2p @ 40% tax