AIBU to think it's terrible I'm paying tax/NI on this?

[BetterCallMum]

I drive around as part of my job. Sometimes I need to stay overnight.

Each month, I submit my petrol and accommodation expenses. I get these reimbursed along with my wage the following month.

Although this 'extra money' shows up on my pay slip as mileage or other expenses, the money is then combined with my standard monthly wage. I then pay tax and NI on the whole amount instead of just my wages.

So, let me get this right, i pay for the petrol/hotel costs out of last month's wages (which I've already paid tax on), get this reimbursed the next month only to pay tax and NI on it all over again!

Initially, I was under the impression that I could file a self assessment at the end of the year and claim tax relief on this, however, I looked into it last night on HMRC and I can't claim it back because my employer has already reimbursed me for these costs??

I get on average an extra £250 a month (expenses), not enough to move me up a tax band however it does increase my NI each month.

Does this seem right?

This doesn’t sound right. As long as my expenses were in HMRC levels for mileage and hotel/meals were in company guidelines I claimed them back each month and they never appeared on my wage slips or as a benefit in kind

Challenge it with your employer. You shouldn’t be out of pocket for legitimate business expenses.

Send the link to the relevant section of the HMRC site: www.gov.uk/expenses-and-benefits-business-travel-mileage/rules-for-tax

It seems extremely unlikely that they pay above the approved amount of 45p/mile, though I suppose if you do more than 10,000 miles, they might, but even then you would only be charged on the extra, not the whole.

Do you claim more than 45p per mile? Or 25p once over 10,00 miles? If so you will be taxed on the difference, as those are the approved HMRC rates and anything more is deemed taxable

I've not been there long enough, Logistria. Just started in March. I didn't pay any tax last year as I wasn't working. I'm not sure i understand what you mean by round sum allowance, sorry. I don't put in my commuting at all (as in the mileage from my house to the office). I submit my claims each month with my office as the starting point, my clients' homes as my in between points and my office as the finishing point.

So so so wrong. DHs expenses are about 3k a month due to the nature of his job, he is taxed at 40%. It is we were paying out 3k a month and getting back 1800 a month it would cost him over 14k a year to do his job!

You are all paying to do your jobs, the value of the expense claim is irrelevant. DH gets his expenses processed and paid separately to his salary. My company is the same, separate claim, separate payment.

I work in the NHS. This happens all the time sadly.

ask your employer, this happened to me - I had to fill in a form then I got them without tax and NI taken off and I got a refund for the contributions that had been made before I noticed. HR should sort it.

Definitely not correct, my salary is paid at the end of the month and expenses halfway through and it’s not taxed. I only receive 20p per mile so also claim the extra allowance separately via HMRC

I think it is correct OP. I work for NHS and used to get 67p per mile. Then it dropped to 57p per mile. After 3500 miles, I think I only got 19p per mile. So yes you need to pay tax etc on the excess amount

They are reimbursing you expenses. That is nothing to do with your salary or anything. It shouldn't be included in your earnings on your payslip. What happens in a normal company is that you fill in a form with the receipts attached, add it up and the accounts department pay you the total. It shouldn't go anywhere near the payroll at all.

I'm just cancelling my Unison subscription and on the website it says they won't represent you for 4 weeks after joining - I'd join as this may go on for a lot longer and you may need their representation.

www.gov.uk/expenses-and-benefits-cash-sum-payments/rules-for-business-expenses

In general, something only counts as a business expense if your employee needs it to do their job. You don’t have to deduct or pay tax and National Insurance on qualifying business expenses, but you need to make sure that they meet all of HM Revenue and Customs’ (HMRC) criteria for:

Are you a HV by any chance?

It's absolutely incorrect.
It is ok to pay expenses through payroll however they aren't subject to tax & NIC as they are a reimbursement of business-related expenses.
Whoever does your payroll needs to read up on this, it's very basic stuff though so rather concerning- you def should get a rebate of the tax & NIC you've paid, going back 6/7 years.

Ps they sent me a letter one year explaining that they were reducing my tax code as essentially I was making a profit doing so many miles. So it was costing me money to do my job!

Thank you all for the advice. Lots to look into tomorrow. Just worried about making a fool of myself with Payroll so want to be confident that they have actually messed up.

WillParty, I'll need to double check my claims on the intranet when I'm back in tomorrow and I will update. I'm not exactly sure what they pay me each mile but that might explain things. I'm sure my colleague told me that they pay us more than typical as they expect this to cover general wear and tear incurred during business use, too.

If i recall, a few times my wage slips have broken down my mileage expenses, too. One line says SU mileage AFC with most of my claim, then underneath there is another mileage line with different letters at the start for a slightly lesser amount e.g. £20. I've never questioned it. I'll download my claims and pay slips tomorrow so I have my own copies.

You might find this link helpful as it directs to HMRC manuals: taxaid.org.uk/guides/information/issues-for-employees/employee-expenses/travel-costs

If they refuse to fix it, personally I would very seriously consider reporting them to HMRC. I would definitely be speaking to HMRC regardless, because you are paying too much tax.

And then if all else fails I would submit overpayment relief claims as necessary. However that will have a massive time delay, so ideally they need to rectify matters.

When you follow that link, if you click on About TaxAid at the top right it will tell you the circumstances in which they may be able to provide assistance. Your salary, based on what you've said, is within the range they were set up to help. I think you would benefit from having specialist tax advice.

Without interrogating you to search for a possible reason they've been treating this as taxable, it sounds wrong. Part of me is wondering if they are treating all the clients as permanent workplaces, but I'd be pretty dubious about that position.

If they paid you fuel in advance that would be treated as a round sum allowance and would be taxable as if it were salary, and then you could claim tax relief on the actual cost of fuel etc you incurred. So it wouldn't really help much even if they did agree to it.

NHS do pay more than 45p a mile so you pay tax on the difference.

67p a mile! Why would the pay more than the HMRC level of 45p and make it a taxable benefit in kind for employees?

A HV's are attached to GP's surgeries so their territory isn't big enough to need an overnight stay Neshoma!

It seems quite a few people on this thread who work in NHS have had the same experiences! I think them paying me over the standard mileage allowance might be the reason behind all of this? I'll update with mileage claim information tomorrow to see if that clarifies things. It will be interesting then to see if my hotel and meal expenses are taxed next week when I get these reimbursed. Nothing to do with petrol/mileage at all.

Thank you all so much for your advice and knowledge.

Ah, if they're paying above 45p per mile for the first 10,000 (25p above) then the excess above that would be taxable. The first 45p wouldn't be. For NIC then everything above 45p is NICable regardless of number of miles.

I've never actually come across an employer that pays above the approved mileage rates, because it costs more and increases administration. I'm surprised the NHS would! The HMRC rates already include an element for wear and tear.

I’m shocked it’s NHS doing payroll so wrong!

You absolutely should not be paying tax or NI on expenses

If all else fails, you can claim it as an expense on the tax return. HMRC won't have a problem with that because from their point of view you haven't been reimbursed an expense. You have received taxable income and have paid expenses out of your own money.

That is not going to sort out the NI though because you cannot claim that back so it is best to pursue it with your employer.

If you started in March and didn’t earn anything since April 2017 then you are due an income tax refund on the tax you paid in March. Log in to your HMRC government gateway account and you can apply for it there.

As an aside, I have never ever dealt with a payroll as incompetent as the NHS!