Mileage allowance

[Usernameismyname01]

I've been working for a new company for 3 months. I have a car allowance and get paid mileage allowance. At first they said 45p per mile but have now reduced this to 25p

I thought it was 45p for the first 10k business miles in the tax year and 25p thereafter but the accounts guy said I was wrong and it's now 25p!!

Does anyone know how this works, it's the first time I've worked like this

HMRC allows up to 45p per mile to be paid up to 10000 miles. Companies don’t have to pay that though. If they pay less you can claim the tax relief back back from HMRC after March each year.

So if you’re on basic rate tax with your salary that that would be 45-25*20% = 4p per mile. Your tax code for next year would be adjusted to that effect.

As above. I am doing jury service next week and they go for the middle 32p per mile

How many miles a month do you do? If you have a good mileage that's quite a reduction in salary as your car will cost you 45p a mile most likely...

So do I have to complete a p11d and if so, will the company give me this form or do I go online and claim direct with hmrc?

I do approx 400 per month

Yes its a faff if your company dont do the 25ppm. I suspect that everyone else is on 45ppm and that new starters are now on 25, companies cutting down on what they pay people by sneaky means

I mean its a faff if they dont do 45ppm

Presumably the car allowance is meant to cover that.

You don't complete a p11d (that's a return of benefits and expenses provided by am employer, mileage expenses would normally be excluded under the HMRC published rates).

You would need to either complete https://www.gov.uk/tax-relief-for-employees/vehicles-you-use-for-work or a tax return.

Not a P11D. That’s the record of benefits you receive.

https://www.gov.uk/tax-relief-for-employees

And the point being at 25p it probably won't...

Petrol £1.42/litre... 4.54 litres in a gallon so £6.45 per gallon.

My reasonably aged car does around 40miles per gallon so there is 16p per mile.

My car then costs around £700 a year in servicing, MOT etc... across the 12000 miles it does so another 6p a mile.

That leave OP with 3p a mile (£360 based on 12000 miles) for any wear - e.g. tyres AND critically the COST OF BUYING THE VEHICLE TO USE FOR WORK PURPOSES to begin with. (Very different to the £2760 a 45p allowance would give.).

This is why the mileage to me is critical. If OP was claiming 100miles a month then its not that big a deal... if however OP is doing 2500miles (reps mileage?) a month its going to be a big issue!

The lower rate is correct because you receive car allowance. Same at my company.

@LittleOwl153 yes plus paying for business insurance

I had to add business use to my policy a couple of years ago and I was very pleasantly surprised at how cheap it was

Obviously I know that I insurance is totally specific to the individual but it only cost about £20 extra, I actually double checked as I thought it must have been a mistake

25p plus a car allowance sounds pretty standard to me

45ppm is maximum allowed for using your own car. As you already get a car allowance it can be reduced.

If you get a car allowance, to receive 45 p a mile on top seems very generous. Are you sure that's what they said? Maybe that's what they pay to employees without a car allowance and the 25 p is for those who do?

45 p a mile is normally paid when you're using your own car, that you've paid for yourself, and also cover tax, insurance and MOT/maintenance etc.

Have they given you a copy of the car policy? That should explain it and have a date of issue in it, so you will know if it's been changed since you were initially given the information.

No, a car allowance on top of 45ppm is not generous. The car allowance is for the contribution and recognition that you are having to maintain your car for work purposes, servicing, MOT, tax, insurance etc etc. Its a fairly small amount (well mine is) which doesnt actually compensate for the extra use the car gets compared to if I didnt use it for work

But most people don't get a car allowance and if they have to use their car for work, they have to pay all the costs themselves and get repaid at 45 ppm.

Are you talking about people that need the car to do their job?

Im not talking about people who use their car to get to and from work?

If your job is recognised as one where you need to do lots of client visits, drive around the country etc etc, then usually the worker will have an 'essential car user allowance', this is what I have. I dont have to be a driver to do my job but doing it on public transport, transporting clients and their belongings at short notice to anywhere in the southeast (and often rest of the country) is not feasible, plus meetings, court and other appointments.

For some people it might just be a perk of the job, but if I was in a job where it was expected (in an unsaid way) that I use my car to carry out my duties, then I would expect car user allowance.

25ppm will be for people with car allowance, 45ppm will be for people without

Yes I am talking about essential car users who do client visits etc and no, it isn't standard that an allowance is payable. You may expect one, but in many sectors that expectation would lead to disappointment.

Maybe some people receive one, but many don't and they either use their own car and are paid 45 ppm, or they have to ask to use a pool or hire car provided by their employer.

I get £8k car allowance and my company then pays 19ppm. I claim the difference to 45ppm on my tax return and think it is a generous way of doing it.

It’s impossible to say if car allowance plus 25ppm is fair without knowing the car allowance, but it is common to have a lower mileage rate when you have a car allowance as your employer has already paid the wear and tear. If you’re getting more than £80pm in car allowance you should be quids in.

Well I think thats very difficult and personally I probably wouldnt take a job where I was out of pocket in that way

As an aside, as I work for public services it would certainly cost the tax payer much more if I didnt drive, the costs of trains, planes, removals etc would be far more than my monthly allowance along with the mileage at 45p. We have had some workers who dont drive, not only is it less efficient but the costs of transport for them is eye watering.

Perhaps with private companies they dont have to consider this

i claim the difference to 45ppm on my tax return and think it is a generous way of doing it.

No you don’t. You claim tax relief on the difference.

There's no maximum, 45p is the tax free limit but your employer can pay you as much as they like as long as it's properly reported