Petrol Allowance Refund?

silvasava

Can anyone clarify for me please. My Grandaughter is a carer and is entitled to a 15p per mile tax refund.  She has just completed her claim and the paperwork back has just allowed that amount to be added to her tax allowance for next year. Is this correct as she was expecting a refund of the money spent rather than an increased tax allowance.

TadleyBaggie

The choice of a refund or increased personal tax allowance is down to HMRC and perfectly acceptable. It ends up being the same thing eventually.

Likewise if you owe tax, they can demand repayment or recover it via lowering the tax code, again both acceptable.

silvasava

Hmm - I'm sure my Grandaughter would have preferred the refund as its quite a lot of money for her. She's already paid it out and wont see the benefit until the next tax year

Dazed_and_C0nfused

I suspect you are getting confused by the timing of HMRC dealing with this.

Which tax year(s) did you granddaughter make a claim for?

Also, why do you think it is a 15p/mile tax refund?

silvasava

The claim is for 20/21 and as her mileage is incurred in travelling to various clients she is entitled to a rebate as the costs come out of her tax paid earnings in the first instance. 

Dazed_and_C0nfused

HMRC never allow tax relief for mileage expenses for one tax year in the tax code of another tax year.

What I suspect is happening is that they have processed her claim and also updated her tax code on the assumption that a similar amount of relief is due in 2022:23.

She will likely get a calculation (P800) for 2020:21 and new tax code for 2021:22 any day now.

The change to her 2022:23 tax code is not allowing tax relief for 2020:21.

And I think you have misunderstood how the tax relief works.  She would almost certainly need to be earning £100k+ to get tax relief of 15p/mile.  What you probably mean is she is entitled to tax relief on 15p/mile.  Which is usually a tax saving of 3p/mile (15p x 20%).  Assuming she has paid tax in the first place of course.

Nearlyold

Assuming she is employed, is your Granddaughter using her own car (which she pays all the costs for  ie purchase costs - fuel - tax insurance etc) or is she using a Company Vehicle but has to pay for fuel herself? If the former then she can claim tax relief on 45p a mile which for a 20% taxpayer means a tax reduction of 9p per mile claimed, 

Dazed_and_C0nfused

If the former then she can claim tax relief on 45p a mile which for a 20% taxpayer means a tax reduction of 9p per mile claimed, 

But it's only 9p/mile if there is zero reimbursement from the employer.

Nearlyold

Dazed_and_C0nfused said:

If the former then she can claim tax relief on 45p a mile which for a 20% taxpayer means a tax reduction of 9p per mile claimed, 

But it's only 9p/mile if there is zero reimbursement from the employer.

Correct which is why I said "If the former"

silvasava

Thank you for your responses. she uses her own car and pays for petrol herself. Her employer contributes 45p per mile but DGD has claimed in the past for the 15p per mile and been refunded. I suspect this is tax relief on the tax paid but this is probably why they have added the relief to her personal allowance. Without seeing the documents I can only comment on what I've been told. TBH I think she needs to speak to the tax office herself for an explanation. 

[Deleted User]

If she receives 45p a mile, no further relief can be due.