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Help! They've taken my sister's tax credits away because she is reimbursed for work mileage!

(12 Posts)
edam Sun 21-Aug-11 12:43:49

This has to be a fuck-up, doesn't it? My sister's a community nurse. Her work reimburse her for mileage travelling to and from patients (and transporting patients). Now HM Revenue & Customs are taking her tax credits away because they are treating these expenses as income! That can't be right, can it? Deeply unfair as they are now taxing her on those expenses too.

I think her work haven't helped because her P60 lumps in all the allowances together, so it's all down as income. But she needs to sort this out fast - if she loses this money, she can't pay her mortgage and she and her dd will lose their new house (which is shared ownership so she's not living high on the hog).

How can she get this sorted out fast? Please help!

wannaBe Sun 21-Aug-11 12:51:52

I know nothing about tax credits so won't attempt to comment on that element, but iirc there is a limit as to what you can claim as "expenses" before it being considered a taxable benefit iyswim. It would also depend on how her employer pays her these expenses as to how they are viewed by hmrc.

How is she paid these expenses - does she have to claim for them separately or are they paid to her as a specific amount in her salary in which case are they classified as specific expenses or does she get a set amount?

Meglet Sun 21-Aug-11 12:53:39

When I worked in my previous job we had a P11D form with all our expenses listed on it. I didn't have a huge amount of mileage so I'm not sure it made any difference but it gave the accurate figure instead of lumping it all in with the wages.

tallulah Sun 21-Aug-11 13:06:32

If it is included in her P60 then that's right. I got Excess Fares from work and lost tax credits plus had to pay more towards my student kids because of my increase in income. Not fair but that is how it works.

edam Sun 21-Aug-11 13:15:07

Thanks everyone. Meglet, I'll tell her about the P11.

Wannabe, I don't know, will ask.

Tallulah, I don't know what excess fares are, but was it extra money, or merely replacing money you had spent travelling in the course of your job? My sister isn't earning extra income, the expenses reimburse her for the mileage she racks up using her own car to travel between patients.

DaisySteiner Sun 21-Aug-11 13:33:05

She needs to check why they've included it in her P60 and classed it as taxable income because she has probably also been taxed on them. If they're expenses incurred solely in the course of her work and below the taxable rate (up to 40p a mile) then IIRC it shouldn't have been put on her P60. They shouldn't really be put on her P11D either because this is also for taxable benefits such as company car, health insurance etc. Her employer should have applied to HMRC for dispensation so that they don't need to be reported on the P11D and refunded directly to the employee. See here

It sounds as though this is a cock-up by her employer NOT HMRC (for a change!!)

LIZS Sun 21-Aug-11 13:43:14

The maximum non-taxable allowable is 45p per mile assuming she doesn't get a car allowance as part of her salary when it is lower.

DaisySteiner Sun 21-Aug-11 13:45:56

It's 45p from April 2011; for the previous tax year which is the one the OP is referring to, it was 40p per mile.

edam Sun 21-Aug-11 15:07:03

Thanks Daisy and everyone - yes, I'm prepared to believe it's the NHS trust not the taxman. Which means presumably all the other community nurses are being fucked over.

mranchovy Mon 22-Aug-11 02:47:08

She needs to fill in a tax return and claim expenses for the ACTUAL miles she does (at 40p per mile for 2010/11) - she will need to have details of dates and distances (although these don't go on the form, you need to have them if HMRC ask) - which should get her a tax refund, and you can also deduct this sum from the amount you put in box 5.3 on the TC600 tax credits claim form. Note that if she has received any mileage payment that she has not been taxed on, this must be deducted from the 40p per mile.

Is she a member of a professional body (RCN etc)? They should have appropriate guidance for their members (and may have it on their web site for non members too), and you may be able to claim the membership fee on the tax return too.

I believe community nurses receive a fixed sum to compensate them for running a car: if this is the case, inclusion of that amount in earnings on the P60 is correct.

edam Mon 22-Aug-11 08:57:18

Yes, she is a member of the RCN, but sometimes they are as much use as a chocolate bandage. Don't know about fixed amount, will ask.

Thanks very much everyone, I'm very grateful.

BikeRunSki Mon 22-Aug-11 09:02:08

I have been there too.
Work mileage expenses include an element of the private cost of running a car - tax and insurance for example which are much the same regardless of why you use your car - and this is accounted for in P60/P11D/tax considerations.

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