Claiming business mileage from HMRC

Johnowen90

Hi There, 
can someone help me please? I am new here so apologies before i start. 

I am currently changing from company car to car allowance from my employer. I understand that now i will be paying fuel myself and my employer will pay me 10p per mile ( 1.3L car ) 
I do about 10,000 business miles a year so the employer will pay me £1,000 for this over the year. HMRC state they pay 45p a mile which means the total value is £4,500 so a difference of £3,500. 

I have heard conflicting things about this. Some say you can claim the £3500 in a rebate from HMRC, and others say you can claim tax relief which would be about £700 ( 20% of the £3500 ). 

My question is which is correct, and also if i only get tax relief for the £3.5K how come i dont get a rebate for this ? 

Any help is extremely appreciated. 

Thank you 

k3lvc

You get tax relief on the £3.5k - either absorbed into tax code (if you tell them and have some history) or claimed back at the end of the year with supporting documentation (mileage record etc)

Johnowen90

Thank you k3lvc , 

So am i right in thinking you dont actually get the money back its just £700 relief applied to tax code? 

Do you know why this is? I am just confused as to why they say you can be paid 45p but they only actually give you £700 back ( in my case ) 

Dazed_and_C0nfused

You have got things very confused.

Only your employer can pay you 45p/mile.

But if you have a car allowance (really just extra, often non pensionable, salary) an employee will often pay a lower mileage rate.  That is between you and your employer.

But I'd you cannot get them to pay 45p/mile then you can claim tax relief on he difference between the 45p and what your employer pays.

So in your example you could claim 45p x 10,000 miles = £4,500 less employer payment £1,000 = £3,500.

The tax relief on this depends what other income you have but could be between £0 and £2,100 although for most people it will be between £700 and £1,400.

If you decide to claim tax relief then you will need to do this by completing a Self Assessment return (as your expenses claim exceeds £2,500).

Some say you can claim the £3500 in a rebate from HMRC

Who said that?

and also if i only get tax relief for the £3.5K how come i dont get a rebate for this ? 

You would be getting a reduction in the tax you have to pay, which is likely to be a refund to you.  But if you are basic rate payer then even 18p/mile from your employer is better than 10p + plus tax relief on the difference.

10,000 x £0.18 = £1,800

10,000 x £0.10 = £1,000 + tax deduction £700 = £1,700

Hasbeen

Is a payment by employer for fuel put on payline thus taxed as PAYE.?

Johnowen90

Hi Hasbeen, 

No the payment will be paid via expenses each month separate to my monthly pay. 

Dazed_and_C0nfused

Hasbeen said:

Is a payment by employer for fuel put on payline thus taxed as PAYE.?

Only if it is more than 45p/mile (when using own car for business mileage)