How much petrol allowance to pay new nanny?

[ziopin]

Nanny has asked for petrol allowance, she does 7 miles a day, dropping kids to and from school. How much extra should I pay her a month. I was thinking £30?

I think thats ok. Depending on what car she has. £30 would give me a full tank so I'd be happy with that.

20p a mile is a reasonable (if on the low side for business use) mileage rate so if she is doing 35 miles a week that is indeed about £30 a month.

We reimburse actual mileage based on HMRC rates of 40p a mile. These are actually very old rates that haven't been adjusted for years so we get her to splash the mileage figures about a bit to make up for it. 40p doesn't cover petrol plus wear and tear these days, no way.

I was gonna suggest 50pence a mile, sorry

Hmm - maybe you all have very generous employers!! My DH gets 28p per mile, and I charge 12p per mile which covers PETROL ONLY (I'm self employed).

28p a mile is rubbish Bramshott! HMRC guidelines have been 40p for aeons, and petrol has gone up massively in that time. Plus thats supposed to cover wear and tear as well. Could your DH get some figures for the model he drives about how many miles a litre it does, then compare to current average price of petrol per litre? Or do his own study, keeping a record for, say, a month of the mileage he does and how much it actually costs him?

And I'd charge more if I were you as well tbh.

Probably second option now I think about it, rather than getting figures as figures are likely to be from manufacturer and 'massaged', based on optimum driving conditions rather than normal every day life.

F you pay more than the Inland REvenue approved rate then she will pay tax on it.If you look on the HMRC website it will tell you how much you can pay.

If you are paid less than 40p per mile, you can claim the difference back from the IR can't you?

I always thought that the HMRC guidelines were a maximum rather than an average Flowery. I've certainly never worked anywhere that paid anywhere near that! We worked it out the other day and for PETROL ONLY (I know that mileage is also supposed to cover wear and tear in many situations) it costs DH 16p per mile. We don't have large cars, but if you spend £75 filling up, and do 500 miles to a tank, that's 15p per mile. My car is more like £70 to fill up and I get 600 miles to a tank - hence 12p.

HMRC describe that as their 'approved' amount, so nothing stopping employers paying less, and tax will be owing on amounts paid over that. But they were set years and years ago, when petrol was much cheaper, so working on the basis that costs of motoring have increased hugely since the last time they were reviewed, my personal view is that it should probably be more. As fourarms says, you can claim back tax relief on the difference between what you get and the approved amount if you are not paid that much.

Is that worth doing flowery? I do about 65 miles a week at work and get 30p per mile. So roughly how much would it be worth to me.

(asking you 'cos you seem all clever and knowledgeable and I'm a bit rubbish with numbers)

Is what worth doing - claiming back tax relief on the difference? Well it all adds up doesn't it?

How much would it be? Haven't the foggiest. I am indeed clever and knowledgeable about some things, however tax is not one of them. I delegate that, always have, find it tedious and boring.

I imagine it would depend on what your tax code is. I just did a few calculations and a difference of 10p for 65 miles a week for 47 weeks a year is just over £300. So not loads, but every little helps, and tax relief on that might buy you something pretty.

Don't know how you'd go about it though. Maybe contact your tax office or whoever does payroll.

This is probably wrong, but I would work it out like this:

65 miles x 48 weeks = 3120 miles
3120 miles @ 10p per mile (the 10p you don't get back from your employer) = £312
£312 x 20% (basic tax rate) = £62.40

So you would get £62.40 back in tax if you are a basic rate taxpayer.

I'm not 100% sure it works like that though - can you really just send in a return if they haven't sent you one to complete?

This is probably wrong, but I would work it out like this:

65 miles x 48 weeks = 3120 miles
3120 miles @ 10p per mile (the 10p you don't get back from your employer) = £312
£312 x 20% (basic tax rate) = £62.40

So you would get £62.40 back in tax if you are a basic rate taxpayer.

I'm not 100% sure it works like that though - can you really just send in a return if they haven't sent you one to complete?

going rate is 40p per mile

a set sum per week/month is good, but then what happens if she does more miles for other activites

might be easier to get her to write miles down and then pay her at end of week/month

Thanks flowery and bramshott

If you aren't paid 40p per mile, you basically can claim back the difference and offset it against the tax that you pay (AFAIK). So the just over £300 figure that FBB quoted is right. I think you can do a retrospective claim over the last 5 years as well. Although if the total in a year is over £1000, you might have to do a tax return or something. That's the case for DH anyway, so when he gets round to it (did 150+ miles per day for 6 months), then we'll be quids in! Just need to get him to knuckle down to the paper work. I expect we'll get an accountant to do it for us.

I really should know more about this stuff shouldn't I? There is a gap in my knowledge that I can no longer fill by smiling nicely at helpful payroll departments at my disposal, those days are long gone.

The following on HMRC's website may be helpful to anyone wanting to claim back mileage expenses.

PAYE80014 shows how your claim be processed, thus shows what figures will trigger Self Assessment, what happens if they feel you have estimated the mileage rather than kept accurate records.

P87 - Tax Relief for Expenses claim form

Guide for Employers about Employee Travel - this may be of help generally. It includes many examples, which will help to determine what is and isn't permitted travel. Also included is an example of an employee being paid above the Approved Mileage rate, thus triggering a Class 1 NICs payment by Employee and Employer.

For anyone interested, to record mileage I keep an A6 sized pre-printed notepad in my car - example sheet - which records Date, Purpose of Trip, Start and End mileage (I use figure from my trip-counter which is reset every time I refuel). Last column is Miles to claim, which can be completed later on - though I've started putting the entire thing now on an Excel Spreadsheet.