Increase to Mileage Allowance?

swanny65

There have been articles recently about how the failure to increase the £0.40 mileage allowance has helped fill the governments pockets.

I can't remember when it was last increased but is there anything to stop someone who is self-employed putting a case with their accounts for a higher rate? Or is the only other option to list expenses paid etc and not claim a mileage allowance.

With inflation the rate should probably be nearer £0.60 a mile.

Sagaris

I've worked for the same company (local authority) for 10 years and there has been no increase in the mileage allowance we are paid - and they have also decreased the 'essential car user's lump sum' that we get paid every month too.

Dont know the answer to your query swanny, but I'd be interested to know too!

Pagan98

swanny65 wrote: »

I can't remember when it was last increased but is there anything to stop someone who is self-employed putting a case with their accounts for a higher rate? Or is the only other option to list expenses paid etc and not claim a mileage allowance.

The mileage allowance relief is the maximum that can be offset without incurring tax. This is 40p/mile for the first 10,000 miles and 25p/mile thereafter. This scheme was introduced in 2002 and doesn't appear to have increased since, despite the increase in fuel costs (although other motoring costs have not increased to the same extent and the capital cost of a half-way decent car has decreased). See here: http://www.hmrc.gov.uk/manuals/eimanual/eim31200.htm

As I understand it (and I'm not an accountant), the alternative is to provide a vehicle via the business and reclaim the actual costs incurred (subject to any benefit in kind if the vehicle is also used for private use).

HTH.

Pennywise

If you are a sole trader, you can, instead, claim the proportion of your actual vehicle costs for business use.

Rather than an increase in the HMRC milage rates, I am told there have been consultations with a view to changing both the mileage rate, BUT ALSO the 10,000 mile threshold - the idea seems to be to reduce the 10,000 to something like 5,000, and possibly REDUCING either the lower or upper rate. If anything, I expect most will be worse off by being able to claim less, so I'm afraid you may be disappointed if you are looking for a higher claim.

Mids_Costcutter

I wonder if the costs of running the average vehicle in the UK have actually increased in recent years, despite fuel price increases?

One stat: between 1997 and 2006 the cost of travelling by car decreased in real terms by 10%. The corresponding costs of travelling by train increased by 6%, and by bus by 13%. Source: Hansard Debates (17 July 2007)

If you want a guide to the total costs of running a car, the AA's web site has some useful tables. Visit:

http://www.theaa.com/motoring_advice/running_costs/index.html

Interestingly the AA point out that depreciation, which of course is affected by mileage, is usually the biggest single cost factor.

Andy_L

we had this thread a couple of weeks ago.
http://forums.moneysavingexpert.com/showthread.html?t=596380
I was of the view that anybody who was loosing money on 40p/mile should stop using a 4.2l Jaguar for business miles.

Mids_Costcutter

Thanks for that Andy, and well done for tackling some of the misconceptions which some have about the business mileage rate! The issue of 40p/mile not being enough to cover costs since recent fuel price increases has also arisen in my workplace.

swanny65

I thought the 40p/mile was meant to cover all motor expenses not just fuel. Best swap my Jeep Hymer for an old 2CV........

Seriously though anyone S/E with a 4.2L jag should be claiming actual motoring costs as the depreciation alone will more than exceed the 0.40 a mile limit.

I do my own accounts which normally take about an hour at the end of the year. I cant be a*sed with keeping every petrol receipt or complex calculations to work out motoring expenses.

All i was wondering was could i squeeze a little more our of HRMC. Although i suppose they, and you Andy,will suggest i buy that 2CV. LOL>

Shiggaddi

Pennywise wrote: »

If you are a sole trader, you can, instead, claim the proportion of your actual vehicle costs for business use.

Rather than an increase in the HMRC milage rates, I am told there have been consultations with a view to changing both the mileage rate, BUT ALSO the 10,000 mile threshold - the idea seems to be to reduce the 10,000 to something like 5,000, and possibly REDUCING either the lower or upper rate. If anything, I expect most will be worse off by being able to claim less, so I'm afraid you may be disappointed if you are looking for a higher claim.

At the moment, it's simple for sole traders, and employees using their cars to keep their accounts simple, and just make a note of each trip, rather than keep all their petrol receipts, repair and servicing receipts, and work out depreciation on the car, and then as well as keep a tally on their work miles, work out how many personal miles were done, and then work out a percentage to write off against tax.

One of the reasons why after 10,000 work miles are done the HMRC amount reduces, is because after doing 10,000 miles, you have effectively written of £4000 against tax, which after paying about £1500 for petrol leaves £2500 for depreciation, wear and tear, tax, MOT, insurance, and unexpected repairs, which for most economic small cars is not too bad. After 10,000 miles there would be no further costs for tax, and MOT, and the car depreciates less per mile, so it's only fair a lower rate should apply.

However, I do think both rates should be increased to take account of inflation, and higher petrol prices.

Mids_Costcutter

Taking inflation into account the overall costs of motoring have decreased by 10% between 1997 and 2006.

hopon

Taking inflation into account maybe, unfortunately the mileage allowance hasn't increased at all, let alone in line with inflation whereas just about every cost associated with motoring has increased over that time.