Self Assessment - Business Mileage

[Deleted User]

Grumpy_chap said:

Albermarle said:

In this case it does not make sense that the person who takes the car allowance can claim some tax relief  on the difference between 45P and what the company pays per mile.

Since when did tax have to make sense?

In fact, I think it does make sense.  The individual can either have a car and therefore carries no costs or risks, or takes the car allowance and then has to cover costs and risks.  The allowance is treated like any other "cash" salary payment.  The individual is then using their own car and can claim the mileage allowances like any other individual using their own car.

I can't see how this could be any different.

Indeed. If it’s car allowance - here’s some extra money, now go buy yourself a car of whatever type and maintain, tax and insure it yourself or

Company car - we pay for everything, it remains the property of the company and we maintain, tax and insure it! 

sheramber

The employee with a company car does not pay for the car. He will get another one when it it too old- possibly  every three years.

The employee with a car allowance has to buy a car or replace his current one when it is no longer suitable. So the car allowance has to cover purchase as well.

Albermarle

sheramber said:

The employee with a company car does not pay for the car. He will get another one when it it too old- possibly  every three years.

The employee with a car allowance has to buy a car or replace his current one when it is no longer suitable. So the car allowance has to cover purchase as well.

I understand all that, but if the car allowance is big enough, then it can work out about the same financially. 
In any case almost nobody buys a car outright nowadays, they lease them with a PCP and get a new one every 3 years.
The advantage is that you can buy/lease a different car rather than just one from the company list and/or buy a smaller one and make a profit.
I appreciate most people with a car allowance  do not get enough to cover all costs, but some do.

sheramber

Albermarle said:

sheramber said:

The employee with a company car does not pay for the car. He will get another one when it it too old- possibly  every three years.

The employee with a car allowance has to buy a car or replace his current one when it is no longer suitable. So the car allowance has to cover purchase as well.

I understand all that, but if the car allowance is big enough, then it can work out about the same financially. 
In any case almost nobody buys a car outright nowadays, they lease them with a PCP and get a new one every 3 years.
The advantage is that you can buy/lease a different car rather than just one from the company list and/or buy a smaller one and make a profit.
I appreciate most people with a car allowance  do not get enough to cover all costs, but some do.

Being supplied a company car or being paid a car allowance, are effectively the same thing

So you agree they are not the same thing .

dreamypuma

Hi sorry, I've not checked this thread for a while.

Yes I do take a car allowance, which is a percentage of my salary, and I am taxed on this allowance as part of my salary. I have to fund the maintenance, road fund and insurance of this vehicle, and also fuel the car (no fuel card) and no BIK / P11D

16p per mile does seem a bit light at current cost per litre. I'd struggle to gain any traction on the rate, as I work for a National Company with over 50K employees, so this would probably take a revolution.

Emotions aside, I probably break even with my allowance as in the past few years (particularly during lockdown) I didn't really use my car much, I expect that this year I'm going to do just under 8000miles

Grumpy_chap

So, the OP receives a car allowance which is subject to income tax and NI in the normal way.

The OP receives 16 pence per mile to cover fuel.
For 8k miles that is £1,280.
HMRC would permit 45 ppm which works out to £3,600, a difference of £2,320.
The OP can claim tax allowance against this amount, so reducing income tax due by £464 (20% rate) or £928 (40% rate). 
Other income tax rates are available.