Tax on mileage?

[Skarossinkplunger]

I submit a mileage claim every month which is then reimbursed with my monthly salary. I have just found out that it’s taxed. Is that normal?

If mileage for work, no. If it’s mileage for getting to and from work, yes.

It’s mileage for work.

Are you sure you’re being taxed on it?

I’ve only realised this because this month I’ve had to have a separate interim payment for my mileage because they didn’t process it in time and it wasn’t as much as I thought it should be. When I asked payroll they said it was because it’s taxed. The cost is supposed to cover fuel costs and some wear and tear so surely when I pay for
those I already pay tax on it?

It will depend on what rate it’s reimbursed at. Above a certain level HMRC will see it as a ‘benefit’ and not just a payment to cover costs. This is currently 45p/mile for the first 10k miles in a year, assuming it’s your own car. The allowable rate will be different if it’s a company car, or if you receive a car allowance as well as a payment per mile.

Our mileage rate is 46.9p per mile. I average about 500 miles per month.

It’s my own car.

You're being taxed on 1.6p per mile, I think.

1.9 sorry

Then you are liable to be taxed on 1.9p a mile of that - the details will be on your P11D. It seems a lot of extra work for someone in payroll for an extra tenner a month, compared to if they payed the HMRC recommended amount...

Ok, this payment was for 2 months mileage totalling 998 miles and I received £318. Does that work out?

That seems as if a bit much has been deducted if the deduction just relates to that mileage (thought I’m neither an accountant or an HR professional, just the person that wrote my firm’s mileage policy). This being the last month of the tax year, could you have hit the 10k mileage cap and therefore only be entitled to 25p/mile without it becoming taxable?

Perhaps check your P11D (should be sent to you annually), or ask your payroll for clarification?

Either they’re taxing you too highly or you’ve hit the 10k barrier this FY. Even so, it still doesn’t work.
Do you submit your expenses as a spreadsheet with a rolling total?

Are you a higher rate taxpayer op? That would be a bit more in tax on the 1.9ppm iyswim.

This doesn't look right, as others have said you only pay tax on the amount over the current rate. If you do 500 miles a month you shouldn't be close to the 10000 limit and even if you are a higher rate tax payer the tax wouldn't be that much.

If they tax at source you don't get a P11D so you need to look into this closer.

I’m certainly not a higher rate taxpayer. The thing is I work for a local authority so I don’t understand how they could get this wrong and not have been pulled up on it.

They’ve probably knocked off a standard percentage for tax as they would do for all interim payments. So 30% or whatever. When it goes through your next payslip it will all adjust back to be correct.

Have you def only done roughly 5000 miles this FY?