Mileage Allowance, self employed

sleepyjones

I'll try and answer some of these questions.

She works for Yodel, so delivers parcels at a flat rate per parcel (I don't know what the rate is), no expenses or fuel allowance from Yodel.
She has an accountant,  the mileage allowance (45p thing) worked out to be a higher amount than the cost of fuel / repairs etc
so that's why they went down that route. 
She's not a "company", hasn't set anything up or registered as a sole trader or anything like that (other than by doing her self assessment tax return, just does it through her normal bank account.

I'm not sure how her insurance works or what type she has or if she gets that from Yodel.

I told her to just talk to her accountant but she said "He hasn't billed me yet so I don't want to remind him that he did my tax returns" ... her words.

She only had around 6 months of working for Yodel in this years tax return so presumably next year it will bring up her personal allowance so that she doesn't have to pay as much / any tax.

I asked her what she wanted the £2k for and she said she was gonna buy a small van (like a caddy) and do deliveries in that so she's not wrecking her car, so she maybe can change the way she does her returns in future.
I'm not sure if that's still the case though, I think she was depending on getting that money back to justify her doing the job ... I think she saw it more of a yearly "bonus" from the tax man to bring up her monthly earnings to a more realistic amount, her argument being that a farm might be 5 miles up a country road, which wouldn't be worth it for her to drive all the way up there and back for the flat parcel rate, so "getting" the 45p per mile would mean she's getting the flat rate from Yodel + 45p per mile from HMRC so she's effectively be getting £4.50 + Yodels flat rate for delivering the parcel.   Without that, I'm not sure it's worth her even doing it and I think she's coming to that realisation now too.

I told her I would give her the £2k but not if she's gonna go spend it at Primark or go on holiday or something, so we'll see what happens.

sheramber

Grumpy_chap said:

sheramber said:

I donlt think self employed drivers come under minimum wage.

It is quite a complex area with many different approaches - we have no information on how the OP's sister works and the extent to which she is self-employed or not.

In some cases, you don't need business insurance.  My Nephew did Amazon deliveries using his own car and Amazon offered a rate where he had to get business insurance and a different rate where Amazon covered the insurance under a group arrangement.  My Nephew took the latter.

So he has insurance cover from Amazon. 

sheramber

sleepyjones said:

I'll try and answer some of these questions.

She works for Yodel, so delivers parcels at a flat rate per parcel (I don't know what the rate is), no expenses or fuel allowance from Yodel.
She has an accountant,  the mileage allowance (45p thing) worked out to be a higher amount than the cost of fuel / repairs etc
so that's why they went down that route. 
She's not a "company", hasn't set anything up or registered as a sole trader or anything like that (other than by doing her self assessment tax return, just does it through her normal bank account.

I'm not sure how her insurance works or what type she has or if she gets that from Yodel.

I told her to just talk to her accountant but she said "He hasn't billed me yet so I don't want to remind him that he did my tax returns" ... her words.

She only had around 6 months of working for Yodel in this years tax return so presumably next year it will bring up her personal allowance so that she doesn't have to pay as much / any tax.

I asked her what she wanted the £2k for and she said she was gonna buy a small van (like a caddy) and do deliveries in that so she's not wrecking her car, so she maybe can change the way she does her returns in future.
I'm not sure if that's still the case though, I think she was depending on getting that money back to justify her doing the job ... I think she saw it more of a yearly "bonus" from the tax man to bring up her monthly earnings to a more realistic amount, her argument being that a farm might be 5 miles up a country road, which wouldn't be worth it for her to drive all the way up there and back for the flat parcel rate, so "getting" the 45p per mile would mean she's getting the flat rate from Yodel + 45p per mile from HMRC so she's effectively be getting £4.50 + Yodels flat rate for delivering the parcel.   Without that, I'm not sure it's worth her even doing it and I think she's coming to that realisation now too.

I told her I would give her the £2k but not if she's gonna go spend it at Primark or go on holiday or something, so we'll see what happens.

NOTE she does not get 45p per mile from HMRC. She gets tax relief at herr ate of paying tax as explained previously..


In this case, the OP has done about 3,900 miles which could be claimed as a business expense at the rate of £0.45 per mile, resulting in the costs to the business of £1,755.
The tax benefit for a sole trader at higher rate tax would be £702.
The tax benefit for a sole trader at basic rate tax would be £351.
The tax benefit for a sole trader below the personal allowance would be £NIL.

She never gets a refund. At best her profit figure is reduced by the amount of business expense so she pays less tax than she would without the expense.

sleepyjones

Yeah, she / we get(s) it now.  I thought this was the case, hence I asked on here to make sure, as in I didn't expect HMRC to pay part of her wages (in the form of a cheque for her expenses) which is what she expected to happen.

Grumpy_chap

sheramber said:

Grumpy_chap said:

sheramber said:

I donlt think self employed drivers come under minimum wage.

It is quite a complex area with many different approaches - we have no information on how the OP's sister works and the extent to which she is self-employed or not.

In some cases, you don't need business insurance.  My Nephew did Amazon deliveries using his own car and Amazon offered a rate where he had to get business insurance and a different rate where Amazon covered the insurance under a group arrangement.  My Nephew took the latter.

So he has insurance cover from Amazon. 

Yes.
I was never interested enough to know any details of the arrangement.

deejaybee

Ive done Hermes or eViL CoRp as they are now known for a dozen or so years, and mileage allowance is a common source of confusion amongst newbies, and even amongst the (employed) so called managers, one of them once telling me how lucky i was to be able to claim X grand off HMRC, thinking they sent me a big cheque every year....

Personally always used the mileage scheme rather than actual costs ( swapped vehicles a few times over the years so could have changed over if i wanted ) Last few years my area has got more compact ( but still just as busy parcel-wise )  mileage gone under 10 K p.a, so all @ 45p which helps keep me out of higher rate tax.

mark5

deejaybee said:

Ive done Hermes or eViL CoRp as they are now known for a dozen or so years, and mileage allowance is a common source of confusion amongst newbies, and even amongst the (employed) so called managers, one of them once telling me how lucky i was to be able to claim X grand off HMRC, thinking they sent me a big cheque every year....

Personally always used the mileage scheme rather than actual costs ( swapped vehicles a few times over the years so could have changed over if i wanted ) Last few years my area has got more compact ( but still just as busy parcel-wise )  mileage gone under 10 K p.a, so all @ 45p which helps keep me out of higher rate tax.

How much do they typically pay per parcel and how many parcels do you get on a normal day? 

sleepyjones

I actually got my dog food delivery today and was talking to the driver who said you can get insurance through Yodel, but he THINKS it's only to cover the parcels, ie : if someone breaks into your vehicle or you have an accident and parcels get damaged ... he wasn't entirely convincing that he actually knew that much about it ... but that's what he said, "You can get Insurance from Yodel, but I think it only covers the parcels".

I dunno if that's maybe the same as the Amazon thing mentioned. 

Grey_Critic

sleepyjones said:

I actually got my dog food delivery today and was talking to the driver who said you can get insurance through Yodel, but he THINKS it's only to cover the parcels, ie : if someone breaks into your vehicle or you have an accident and parcels get damaged ... he wasn't entirely convincing that he actually knew that much about it ... but that's what he said, "You can get Insurance from Yodel, but I think it only covers the parcels".

I dunno if that's maybe the same as the Amazon thing mentioned. 

As Yodel is a delivery company then I would think that the insurance cover would only apply to those working with Yodel

sleepyjones

Yeah, someone above mentioned that they had the option to buy insurance from Amazon (when said persons nephew was working with Amazon) ... so I'm wondering if it's the same, as in that insurance is only to cover the parcels, it doesn't actually cover the vehicle.