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Petrol Allowance Refund?

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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.

Small victories - sometimes they are all you can hope for but sometimes they are all you need - be kinder than necessary, for everyone you meet is fighting some kind of battle
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Comments

  • 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
    silvasava Posts: 4,433 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 16 February 2022 at 1:50PM
    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 :(

    Small victories - sometimes they are all you can hope for but sometimes they are all you need - be kinder than necessary, for everyone you meet is fighting some kind of battle
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,570 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 16 February 2022 at 1:53PM
    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
    silvasava Posts: 4,433 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    edited 16 February 2022 at 3:22PM
    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. 
    Small victories - sometimes they are all you can hope for but sometimes they are all you need - be kinder than necessary, for everyone you meet is fighting some kind of battle
  • 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
    Nearlyold Posts: 2,377 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Combo Breaker
    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, 
  • 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
    Nearlyold Posts: 2,377 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper Combo Breaker
    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
    silvasava Posts: 4,433 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    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. 
    Small victories - sometimes they are all you can hope for but sometimes they are all you need - be kinder than necessary, for everyone you meet is fighting some kind of battle
  • If she receives 45p a mile, no further relief can be due. 
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