New Job - Cash Allowance for Car

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LawAbiding
LawAbiding Posts: 295 Forumite
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in Cutting tax
Hi,

Hoping to pick some brains.

I currently have a company car and fully understand how this works.

I have been offered a new job and so far they have insisted on a cash allowance rather going through the companies company car scheme. These are the options provided:

Cash Allowance: £650 gross per month.
Business mileage can either be claimed at the HMRC advisory fuel rate of 11ppm (Diesel up to 2L) or 13ppm (Diesel over 2L).

or

Cash Allowance: £275 gross per month.
Claim business mileage for the first 10,000 miles @ 45ppm and after 10,000 miles @ 25ppm
(HMRC rates).

I found it strange to be offered two different options....

What are the tax implications with the business mileage claims?

I understand the gross per month amounts will be deductible, but is the expense claims for the business mileage expenses?

Any help would be appreciated.
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Comments

  • lal5000
    lal5000 Posts: 27 Forumite
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    Just to further confuse it.

    My employer uses option A and I also claim back relief between the 13p a mile I get and the 45p a mile I could get at 40% (think its actually 14p a mile now btw).

    0.45-0.13 = 0.32*10000*0.4 for the first 10000 miles. Works out at extra £1280 a year plus anything over that at the low rates, tax free. Not to be sniffed at!

    Personal opinion. Option A is better by a mile if you can be bothered to sign up for self assessment and claim back the difference, especially if you arent being paid within the 20% bracket!
  • LawAbiding
    LawAbiding Posts: 295 Forumite
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    Sorry should have provided salary details.

    The salary will be £60,000 per year.

    Estimated business miles: 10,000 miles
  • LawAbiding
    LawAbiding Posts: 295 Forumite
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    That is very confusing!
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    LawAbiding wrote: »
    Sorry should have provided salary details.

    The salary will be £60,000 per year.

    Estimated business miles: 10,000 miles
    for someone "worth" £60k surely you can do basic sums as shown ?
  • LawAbiding
    LawAbiding Posts: 295 Forumite
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    00ec25 wrote: »
    for someone "worth" £60k surely you can do basic sums as shown ?

    Who said I hadn't done the maths,

    I have done them and the choices are looking clearly to me.

    I just provided the extra information in case anyone else has opinions.....
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    It's really only your opinion that counts.

    You have to be careful taking comments on a public forum as "advice" when it comes to a reasonably significant decision like this.

    Remember HMRC don't pay mileage, you can claim tax relief on the difference between the tax free rates and what your employer pays you (on eligible business mileage).

    On that lever of salary the tax relief will probably be worth 41% (40% if not Scottish resident for tax purposes) but could be more if you are liable to the High Income Child Benefit Charge.
  • LawAbiding
    LawAbiding Posts: 295 Forumite
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    Dazed_and_confused wrote: »
    It's really only your opinion that counts.

    You have to be careful taking comments on a public forum as "advice" when it comes to a reasonably significant decision like this.

    Remember HMRC don't pay mileage, you can claim tax relief on the difference between the tax free rates and what your employer pays you (on eligible business mileage).

    On that lever of salary the tax relief will probably be worth 41% (40% if not Scottish resident for tax purposes) but could be more if you are liable to the High Income Child Benefit Charge.

    Thank you for the constructive comment!

    Regarding the High Income Child Benefit Charge, I will be opting out of Child benefit completely to make life easier.

    It's interesting that it is possible to claim tax relief between the tax free rates and what my employer will be paying, specially with Option A. Makes that Option much better.

    Thanks again.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    How much you earn makes a huge difference here.

    Earn £10k and claiming is pointless as you have paid no tax.

    Earn £60k and with a fair wind you will get 40/41% back (of 32p or 34p/mile on the first 10k miles).
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    LawAbiding wrote: »
    Who said I hadn't done the maths,

    I have done them and the choices are looking clearly to me.

    I just provided the extra information in case anyone else has opinions.....
    then as it is a maths question there is a categoric answer. Opinions are unnecessary since the answer is the answer.
  • LawAbiding
    LawAbiding Posts: 295 Forumite
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    00ec25 wrote: »
    then as it is a maths question there is a categoric answer. Opinions are unnecessary since the answer is the answer.


    Interesting your first response has been deleted?

    Do you just comment just for sake of increasing your post count?
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