Claiming private car allowance

Pemd

Thank you most helpful 

ruth13babe

Hi - kind of related question I hope you can all help me with - my company has decided to stop paying mileage (e.g. I drive to a customer site and can no longer claim the mileage). I'm PAYE and a permanent employee but can I still claim the 45p a mile back from the HMRC or any amount in fact?
Thanks.

Grumpy_chap

ruth13babe said:

Hi - kind of related question I hope you can all help me with - my company has decided to stop paying mileage (e.g. I drive to a customer site and can no longer claim the mileage). I'm PAYE and a permanent employee but can I still claim the 45p a mile back from the HMRC or any amount in fact?
Thanks.

This might be better as a separate thread, but here goes anyway.
To answer the direct question you have asked:
1. An employer can pay an employee any rate that is agreed for mileage in a personal car.
2. If you do business mileage in your personal car, then you can be reimbursed up to 45 pence per mile for the first 10k miles and up to 25 pence per mile beyond 10k miles.  That is the maximum that can be paid by the employer and not create a tax liability for the employee.
3. If the employee is paid less than the 45 ppm / 25 ppm rates, then the employee can claim the tax back on the amount not paid by the employer.  Normally 20% or 40% tax that can be claimed back, so the effective claim becomes 9 ppm / 5 ppm (basic rate) or 18 ppm / 10 ppm (higher rate).  
4. The HMRC will not pay you the full 45 ppm / 25 ppm that the employer did not pay you.
5. If the employer paid at a lower rate, say flat 25 ppm, then the employee can claim the tax back on the difference.  For the flat 25 pm example, the tax claim would be 20% or 40% of 20 ppm (45-25) for max 10k miles.
5.  You need to keep accurate records of business mileage to allow you to claim the difference.

A bit of context would be useful as it is unusual for an employer who requires employees to travel to fulfil their duties not to expect to meet the costs of necessary travel.  Has the employer decided that the train should be used, or provided some other compensation to replace using own car?

ruth13babe

I don't know the reason for the change in company policy. We were allowed to claim 17p/mile as company car allowance holders (i.e. I am paid a car allowance as a monthly taxable benefit); but in November 2020 the company changed the policy and have stated "for the avoidance of doubt, employees who are paid a car allowance cannot claim mileage". They have also stated semi-publicly that this is for carbon footprint reasons (i.e. try and use public transport instead) and we have heard rumours of some mileage fraud.. However where I live, it takes a lot longer (and is more expensive!) to go by public transport AND I'd rather not use London Underground in COVID times unless totally avoidable. As a further example, driving to my customer site is a 100 mile round trip which takes 2h as a round trip (1h each way) but takes 2.5h by public transport. Hope that is more background for you, I appreciate your answer so far! So I have done 4 trips of 100 miles so far without claiming anything; and yes I will keep a record of this.
Also I didn't know which thread to post this in - hence tagged it on to this similar question!
Thanks.

ruth13babe

Correction - 1 way by public transport to the customer site in this example is a 2.5h journey. So round trip would be 5h by overground and London Underground/tube.