Mileage Allowance, self employed

sleepyjones

Does anyone know the process for claiming a tax rebate using the Mileage Allowance "thing"?

My sister is doing some driving work (delivering).  She's done her self-assessment tax return and thinks she is entitled to around £2000 in the form of a rebate (she did tell me the exact amount but I can't remember what it was).  I thought they would just take the £2000 off her tax bill but it appears she hasn't earned enough to pay tax.  Does this mean she'll get a rebate? and how does she receive that, will they just send her a cheque?, any idea roughly when?

She's asked me for a loan of the money until she gets her rebate, but I just want to make sure she will actually get it before I commit to anything  

(Not sure if this should be in "Motoring" or "Cutting Tax", feel free to move if in the wrong place)

unforeseen

As its a tax REBATE or adjustment of her tax allowance then, as she doesn't earn enough to pay tax then she won't get anything

summer_daze009

As business motoring mileage is claimed as a tax relief and taken off her final tax bill, she will not get any tax relief or rebate as she hasn’t paid any tax

sleepyjones

This is kinda what I thought, glad I asked.
The impression she gave me was that it's a rebate paid to her from the tax she's paid on fuel, repairs etc.

summer_daze009

The only way that she could claim a rebate of any description on her fuel and repairs etc. is if she was registered for V.A.T and then she could claim back the VAT. But that’s a whole new scenario and unadvisable in her current position

ontheroad1970

Tell her to make sure that she is properly insured for business driving.  Would be a very expensive error not to.

Grey_Critic

From the Government website.

Approved mileage rates from tax year 2011 to 2012 to present date

From tax year 2011 to 2012 onwards	First 10,000 business miles in the tax year	Each business mile over 10,000 in the tax year
Cars and vans	45p	25p

macman

sleepyjones said:

This is kinda what I thought, glad I asked.
The impression she gave me was that it's a rebate paid to her from the tax she's paid on fuel, repairs etc.

No, it's an expense allowance on income tax, which reduces her self employed profits. If that reduces her profits below the personal allowance, then she pays no income tax.

Grumpy_chap

sleepyjones said:

My sister is doing some driving work (delivering).  She's done her self-assessment tax return and thinks she is entitled to around £2000 in the form of a rebate 

How exactly has that £2k figure been arrived at?

Is that the mileage rate at 45 pence per mile?  So, she has done 4.5k miles which calculates to £2,025?  If so, it would reduce income tax for a basic rate tax payer by £405.

As others said, if her income tax is below her personal allowance in any case, the matter is moot as it will save tax at the rate of zero percent.

sleepyjones

Grumpy_chap said:

How exactly has that £2k figure been arrived at?

Is that the mileage rate at 45 pence per mile?

Yep, I can't remember the amount, it was £1755 (at 45p per mile) some random number like that but she was asking me to round it up to £2k as a loan.

Meeting her for dinner tomorrow so I'll let her know the bad news.

Thanks folks

soolin

This does seem to be a fairly common misunderstanding. In the past few weeks, probably triggered by the Jan deadline for online tax returns, I’ve seen a number of similar question on other small business boards. It usually takes the form of self employed people asking who to contact to get paid their 45p a mile and even asking whether this goes directly into a bank account or will ‘someone’ send them a cheque. 

I wonder if the explanation sheets available when preparing accounts are unclear, or whether people don’t read them and just assume they get this amount paid to them ? 

I suspect that unfortunately there are quite a few disappointed people out there.