Claiming tax relief on business mileage claims when rate drops

Tom_Bradbury

I'm an emergency worker who does a lot of mileage using my own car.  Under my nationally agreed terms and conditions, I can claim £0.56p per mile for the first 3,500 business miles, but after the first 3,500 miles, the rate drops to £0.28p per mile.  As the £0.28p per mile is below the HMRC tax free rate, which is £0.45p per mile, can I claim tax relief on the difference (£0.17p) between the rate I am paid and the HMRC advisory rate?    I know I am taxed on the £0.11p amount I am paid over the £0.45p per mile for the first 3,500 miles.

[Deleted User]

Work out the relief due (or profit) on the actual miles that you do. For 5000 miles, for example, the amount that you can claim tax relief upon is £2250 (5000 x 45p). You will receive £2380 (3500 x 0.56 plus 1500 x 28p) and will have a profit to declare of £130. 

I haven’t worked it out but it appears that you will only start to lose out at around 5750 miles or so.

Dazed_and_C0nfused

I think a slight complication here would be if the £0.11 is already being taxed.

Op, is the tax deducted on your payslip or by a tax code adjustment?

[Deleted User]

Dazed_and_C0nfused said:

I think a slight complication here would be if the £0.11 is already being taxed.

Op, is the tax deducted on your payslip or by a tax code adjustment?

It would. However my only experience of this is with the NHS who provide the relevant employees with details of ‘profit’ at year end. Haven’t seen it taxed at source before.

Tom_Bradbury

Dazed_and_C0nfused said:

I think a slight complication here would be if the £0.11 is already being taxed.

Op, is the tax deducted on your payslip or by a tax code adjustment?

Hi - the £0.11p is taxed at source automatically, so I pay tax on the amount over £0.45p every time I get a payslip with expenses paid at £0.56p, until I get to 3,500 miles and then rate drops to £0.28p per mile.  No tax is taken from then because I am then under £0.45p.