How to calculate cost of commute to a single place of work?

user1168934

My office is being moved to a new place and I have been asked to calculate the additional cost of commute to the new office, possibly with the intention that the employer can reimburse the extra cost. Can someone kindly guide me what to include please?


At the moment I walk to work. I will be driving to the new place. I own a Honda Accord 2.0, petrol. The new office is approx 12 miles from my house (each way).


The obvious one is the fuel cost, someone told me that the HMRC rate is 0.45pence per mile. So that will be 12x2x5x0.45 per week.


Do I need to include wear tear on top? How much? How do I calculate average wear and tear. Is there some standard rate for wear and tear just like the HMRC mileage rate?



Anything else I need to include? very confused right now.

lopsyfa

I would have thought the £0.45 per mile already include everything your employer can pay you(i.e the wear and tear, fuel cost etc). For example, if your car only return 25 mpg and with a petrol price of £1.24/L, the cost per mile is only £0.2255/mile. I believe the premium is there to account for the wear and tear and other costs that may be involved.

If your employer pays you above this rate, they will have to report that to HMRC and you will need pay tax on it.

user1168934

lopsyfa wrote: »

I would have thought the £0.45 per mile already include everything your employer can pay you(i.e the wear and tear, fuel cost etc). For example, if your car only return 25 mpg and with a petrol price of £1.24/L, the cost per mile is only £0.2255/mile. I believe the premium is there to account for the wear and tear and other costs that may be involved.

If your employer pays you above this rate, they will have to report that to HMRC and you will need pay tax on it.

Oh, OK I did not know that it included everything. It did look like a lot per mile to be fair. Thanks.


Does that mean I will be paying more tax tha usual? or is that something I can claim back from HMRC?


Is there another alternative way to calculate these costs so I don't lose money in excess tax?


FYI - at the moment I don't know what the employer will pay (if they pay anything at all) and how they will calculate it and what kind of proof they will need. I (and other people) have just been asked to come up with a number for additional cost of travel.

user1168934

lopsyfa wrote: »

I would have thought the £0.45 per mile already include everything your employer can pay you(i.e the wear and tear, fuel cost etc). For example, if your car only return 25 mpg and with a petrol price of £1.24/L, the cost per mile is only £0.2255/mile. I believe the premium is there to account for the wear and tear and other costs that may be involved.

If your employer pays you above this rate, they will have to report that to HMRC and you will need pay tax on it.

Sorry, just read your reply again and it makes sense. Ignore my question in the last post.
Many thanks for your help.

BananaRepublic

You could use the 45 p per mile, then tell your employer that because they are compensating you for the commute, and any compensation is taxed, that you will add on the tax rate to the 45 p per mile. They might laugh and say no, but it’s a start.

It’s reasonable to tax the mileage allowance, otherwise it would be a way to pay you and avoid tax.

user1168934

BananaRepublic wrote: »

You could use the 45 p per mile, then tell your employer that because they are compensating you for the commute, and any compensation is taxed, that you will add on the tax rate to the 45 p per mile. They might laugh and say no, but it’s a start.

It’s reasonable to tax the mileage allowance, otherwise it would be a way to pay you and avoid tax.

But from @lopsyfa's post above, it should only be taxed if my employer pays anything above 45p. Anything upto 45p should be tax free (like an expense claim), right?

lopsyfa

BananaRepublic wrote: »

You could use the 45 p per mile, then tell your employer that because they are compensating you for the commute, and any compensation is taxed, that you will add on the tax rate to the 45 p per mile. They might laugh and say no, but it’s a start.

It’s reasonable to tax the mileage allowance, otherwise it would be a way to pay you and avoid tax.

That will be commiting tax fraud. For more information:
https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax

AdrianC

What does it actually COST you?

Fuel alone is simple to calculate. How many mpg do you get? At £1.20/litre, just divide 540 by the mpg to work out the cost per mile in pence.

Obviously, fixed costs of ownership, and variable costs for your current private mileage can't be included. Insurance and tax aren't going to change. So other variable costs? Impossible to be sure, you can only guess. How old is your car, and will depreciation be markedly affected by <6,000 extra miles per year? No way to put a simple wet-finger guesstimate to that. Maintenance? Assuming 9k services, add on the cost of an extra service every 18 months - probably about 2p/mile. Being pessimistic, let's assume the additional marginal wear/maintenance is 3p/mile.

user1168934

lopsyfa wrote: »

That will be commiting tax fraud. For more information:
https://www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax

Thanks mate, very informative link. I think I will just keep it simple and quote 45p for everything included. If they are not happy with it then they might offer an alternative.

JustAnotherSaver

I use this http://www.fuel-economy.co.uk/calc.shtml for calculating fuel cost.


While it may not be to the penny in terms of accuracy, it's also not a million miles out.

DUTR

user1168934 wrote: »

Thanks mate, very informative link. I think I will just keep it simple and quote 45p for everything included. If they are not happy with it then they might offer an alternative.

You don't tell them, you submit a mileage claim and you get a P11D statement at fiscal year end, the company will have a rate they pay which may not be 45p/mile. It could be less but you can claim the difference in tax between what they pay and 45p.
Then again the company may have a relocation package.