What mileage rate do you think is acceptable?

[Devils1vy]

My daughter has her first job coming up (young people care and support) and it requires use of her own car. What mileage rate do you think is acceptable? A similar company quotes 30p a mile, my last job that had this paid 45p a mile.

She drives a 3-door Corsa if that's relevant.

HMRC allow 45p a mile ( it might be more now) What are they offering?

I get 35p but I also get a very small additional car expense in my salary of about £700/year

We get the HMRC rate

If you don't get the HMRC amount of 45p you can claim back from HMRC for the difference.

Only as a tax deduction, so the benefit is the PAYE on that amount

45p as per current HMRC Allowances:

www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances

I work in expenses policy for a big organisation. The HMRC allows organisations to pay up to 45p tax-free for motor travel which is not to or from a place of work. This drops to 25p after the first 10,000 miles inn each tax year. (if it is to/from work it's a benefit in kind and taxable). Organisations are free to pay more or less than that. We do 24p for motorbikes and 20p for bicycles, whether electric or purely pedal. If an employer pays back at a lower rate than these, the employee can apply to HMRC for mileage allowance relief at the end of the tax year to cover the difference. For example, if the employer pays 30p per mile, staff can claim tax relief on the difference of 15p per mile.

More important than the mileage rate is that she is paid at the proper hourly rate for her actual time spent travelling.

I'd certainly be asking for 45p per mile with the current cost of fuel though... it's meant to contribute to all the other running costs of a car as well.

I've worked in a few different places that paid mileage and they had different rules that applied to all employees regardless of what type of car they had and there wasn't any discussion involved, you got what they said and if less than the 45p per mile claimed the tax back on the difference

My current place pays at the HMRC limits but I know other people who get less

45p is the hmrc maximum and has been for years. I think that's what I was claiming 20 years ago.

For a long time it was probably too high and was never increased in the drive to discourage car use, but I do think it needs looking at again now.

I'd be very disappointed in an employer that didn't pay the 45p in the current climate.

My car gets about 45 miles per gallon, so was up to about 19p a mile in petrol alone. Add in the cost of business insurance, more regular services etc and I'd be pretty grumpy about anything under 30p and I only drive a small car.

How much is your buisness insurance? By mistake I hadn't ticked that when using a comparison site this year and only realised when speaking to the insurer, this was the first time I'd ever known the separate cost for that - less than £20.

Obviously all quotes are unique but I hadn't realised until then that it actually costs me next to nothing

Ideally they should pay 45 ppm for the first 10k miles pa and pay her for all her travel time, because driving service users around or going to and from their homes is part of her job, but if she has already accepted the job and it was advertised as 'own car required' then she's probably not in much of a position to negotiate and will have to accept what the company offers?

She could negotiate terms and ask for paid travel time and 45 ppm but if the company refuses, then she will have a choice of accepting what they do offer, or finding another job.

AMAP rate was 40p from 6.4.2002, and 45p from 6.4.2011.

Our company have just put the rate up to 55p but I will have to declare the 10p and pay tax on it.

I don’t disagree that it should be higher, but business insurance adds hardly anything on to your insurance. I think the most ‘extra’ I’ve needed to pay in the last twenty years is £19. This year it was £4.

I think mine was about £30 extra when I last checked, probably less now as my insurance has decreased in cost. Depends how many miles you do for work though - when I did 10,000 that was a negligible cost per mile. Now I do maybe 500, so it's somewhere between 3 and 6p a mile if you say £15-£30. OP's DD is presumably pretty young if it's her first job so the cost of insurance is likely to be higher.

If I drove more miles I would be more worried about the services and the tyre wear and tear than the business insurance - depends if it's the fixed or variable costs impacting you most really.

@123ZYX is that true? So, you don't get (45p/mile minus your employer's mileage rate) but (45p/mile minus employer's rate)x personal tax rate 20% or 40%? My employer insists it's the first - ie I do get 45p/mile made up of 13p from employer and 32p from tax man. Which is still rubbish but mainly a timing issue.
If the second is true I will only get just under 26p/mile in total (13p from employer plus 12.8p (40% of 32) from tax.

Can you point me to where the rules are about this? If my employer is wrong I'd like to show them where, in the hope they will change the policy! Thanks

@Defiantlynot41

Here you go:

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

The first bit explains the tax relief and then the mileage detail is later on.

If HMRC paid the mileage rate they would effectively be paying a business expense for companies - companies would just pay nothing and get HMRC to cover their travel costs for them!

HMRC treat it as a business expense of 45p / mile, then you get paid salary plus mileage reimbursement. You then deduct the 45p/mile from the total of the two and pay tax on what's left. This means that the benefit to you is only the tax you would have paid on the salary that's covering the part of the 45p/ mile that isn't reimbursed

But if you are salaried and not hourly paid, the "wages" part get paid whether you travel or not - and so when you travel, you are subsidising your company?

From a tax perspective, yes - that's why you get is as a deduction for your tax, rather than the company deducting it as an expense for corporation tax.

In terms of actual costs, whether you are subsidising depends of whether the amount you claim is more or less than the actual costs you incur. It's hard to calculate that, because you don't know how long tyres will last, how long between oil changes etc, which is why HMRC allow 45p/ mile as a reasonable estimate. It reduces to 25p/ mile after 10,000 miles (I think - worth checking these amounts if it's relevant), because things like MOT costs are considered to have been covered by then. Where employees do large amounts of driving, the company may estimate the total mileage and average the 45p and 25p across the whole mileage, rather than reducing the claim for the last part, to try to simplify things, with an adjustment or tax claim/ charge at the end of the year

I get 56p, the other half gets 10p plus £5500 a year car allowance.

That said I do about 2000 business miles a year, the other half does less than 100.

I will be sure to tell my DD this.