P87 - confused!!!

al86shaw

Hey

With my job, I do approximately 25,000 miles a year for my job, and usually I fill in a P87 form. I usually always send it away as soon as the tax year ends, but the taxman always takes months and i mean months to acknowledge my form before issuing a rebate.

My work give me 28p a mile, so I know using a P87 form, I should be able to claim up to 40p a mile for the first 10,000 miles and then 25p for any other miles after this.

The P87 form also says I should fill in a tax return instead if my expenses exceed £2,500.

Its plain obvious to see that now, but do i really need to fill in a tax return? My salary is only £13.5k.

Timmicartier

Does anyone know if I am able to claim using a P.87 if I also receive a car allowance from my place of work?

Thanks in advance

jennifernil

Yes, your car allowance should be being taxed as salary, so you can still claim tax relief on mileage.

Timmicartier

Thanks. Don't suppose you know anything about mileage rates? The FD of the company i work for has suggested that i should claim the 25p per mile rate for my car as it is 2litre petrol (1995 cc) as it is 'effective 2 litre' but i am concerned i will be penalised by HMRC as the rules actually state the car has to be above 2000 cc to claim this higher rate. To be fair it is a little ambiguous and the difference in mpg economy between 1995 cc and 2001cc is nothing but the difference in the claim is 7p per mile.... any ideas?

cheers

suky321

hi,

The company I work for pay different amounts for mileage dependent on the number of miles I do in a tax year, so for example, I have been getting paid 40p per mile for the first 2500 miles I've done, but then after that it's 12ppm.

My questions is:

Would I get any tax relief on the 40ppm payments (I'm guessing no, if no, then will I end up paying more tax to HMRC?

jennifernil

You are allowed to receive tax free 40ppm for the first 10000 miles, then 25ppm for anything over 10000 miles, for 10/11.

And from this year it's 45ppm and 25ppm.

At the end of the tax year, if you have received less than that, you can claim tax relief on the difference.

http://www.hmrc.gov.uk/paye/rates-thresholds.htm#8

http://www.hmrc.gov.uk/paye/exb/a-z/m/mileage-expenses.htm

jennifernil

Timmicartier wrote: »

Thanks. Don't suppose you know anything about mileage rates? The FD of the company i work for has suggested that i should claim the 25p per mile rate for my car as it is 2litre petrol (1995 cc) as it is 'effective 2 litre' but i am concerned i will be penalised by HMRC as the rules actually state the car has to be above 2000 cc to claim this higher rate. To be fair it is a little ambiguous and the difference in mpg economy between 1995 cc and 2001cc is nothing but the difference in the claim is 7p per mile.... any ideas?

cheers

There is only one rate now, and has been for several years, see the links above.

Your FD is incorrect!

Timmicartier

Thanks again.
i am still a little confused. with regards to Tax Relief on mileage, why am i able to claim when receiving a car allowance, whereas i wouldnt be able to claim if i opted in to the company car scheme? the car allowance rate and benifit in kind is the same....

cheers

jennifernil

A car allowance is usually taxed as wages. It is not a benefit.

If you provide your own car to use in your job then you are spending money buying, taxing, insuring, servicing, repairing and running the car, the 45ppm is to cover a portion of all that, plus the increased depreciation, and you are entitled to receive it tax free.

Owning a car is not cheap!

If you get a company car, it costs you nothing, so it is a benefit and liable to tax. You can then get fuel for business use paid for, tax free, but not fuel for private use. So you cannot claim the 45ppm.

leehal

My expenses have never exceeded £2,500 but for the last 4 years I have been completing a self assessment tax return. Because of this I only use the P87 form to calculate the amount to include on my tax return.

Numerous people where I work have queried the £2,500 threshold and despite no one going over this amount we all have to fill in self assessment forms, a pain but at least I know my tax is correct.