Car allowance expenses question

[AJRH]

I receive a car allowance from my company. It is paid along with my salary, taxed at source, and has no restrictions on its use.

I own my own car outright, but my company insure it, and pay c. 11p per mile for business mileage only.

I have been told that it is possible to claim back from tax paid up to 45p per mile from the government. I.e. an extra 34p per mile.

Is this wishful thinking from my colleague, or does any of the above sound accurate?

Interested in your thoughts!

[s2sol]

Can't help,just wanted to be in before the title!

[rfn]

You can claim back the tax on the difference only, rather than the entire 34p.

This HMRC link should help:
http://www.hmrc.gov.uk/incometax/relief-mileage.ht...

[Eric Mc]

If the company is paying the car insurance for you, is that not a taxable Benefit in Kind? Did your employer provide you with a P11D for tax year 2010/11 and if so, what did it show?

What is your current PAYE Tax Coding (and don't tell me you don't know - EVERYBODY should know what theuir coding is and what it represents).

[AJRH]

Thanks for the replies - I don't know what happened to my title - Blackberry issues!

I haven't received a P11d form as I haven't worked through a tax year (I guess). I'm afraid I don't know my PAYE coding as I've only recently returned from working in the Middle East where PAYE tax is wonderfully absent.

Given its probably on a fleet policy, how would they break out the 'benefit' applicable to me from the overall premium?

[Eric Mc]

AJRH said:

Thanks for the replies - I don't know what happened to my title - Blackberry issues!


Given its probably on a fleet policy, how would they break out the 'benefit' applicable to me from the overall premium?

Nothing is impossible. Everything has a monetary value.

What tax coding is showing on your most recent wages payslip?

[AJRH]

747L, which appears to still be an emergency code.

[Eric Mc]

It isn't.

That is the standard code for a person entitled to the normal 2011/12 income tax allowance of £7,475.

This means tyour employer is taking no account of the Benefit in Kind you are currenttly receiving and thetrefore you areb not paying the correct tax for 2011?12. You are possibly paying too litle.

I would ask your employer if they look on the fact that they are paying their employees' motoring insurance as a benefit in kind and, if so, what steps should you/they be taking to ensure that the correct PAYE is being calculated on your wages.

[AJRH]

Thanks Eric - some points to consider.

[anonymous-user]

When I last worked in the UK I claimed the whole 45p, you add the insurance and the 11p a mile and any monthly car allowance, to your gross pay, and then take 45p a mile off to get the taxable total.

It was 45 p for 10k miles then it dropped.


I always used a book called 'using your car for your employers business' but I'd expect it all to be on the web now.

[Eric Mc]

It's been 45p per mile since 6 April 2011.