Employer mileage limits and options to avoid enforced c/c
Discussion
Hi,
I receive a car allowance, but the caveat is the business mileage has a cap if providing a car for work. If you exceed this cap you then get punted into a company car whether you want it or not. On a pro-rata mileage calculation I will be sailing fairly close to this limit, and may exceed it but not by a significant margin.
Irrespective of car allowance or company car, the employer pays the HMRC quarterly adjusted guide rates for mileage reimbursement (i.e. not the 45ppm but instead around the 15ppm as currently). I do claim the tax relief annually for the remaining difference to the 45ppm.
The employer records the business mileage driven when expenses are claimed.
Rather than claiming the business mileage if I am going to exceed the cap, could I alternatively (and legally) choose to claim the full tax relief on 45ppm for the extra over mileage beyond the cap to avoid the company car if I did not want to risk being forced into one?
To set the scene, I am looking at maybe only a 1 - 2 k miles over the cap at most, which is why I am (currently) resistant to the company car as you can imagine.
Thanks!
I receive a car allowance, but the caveat is the business mileage has a cap if providing a car for work. If you exceed this cap you then get punted into a company car whether you want it or not. On a pro-rata mileage calculation I will be sailing fairly close to this limit, and may exceed it but not by a significant margin.
Irrespective of car allowance or company car, the employer pays the HMRC quarterly adjusted guide rates for mileage reimbursement (i.e. not the 45ppm but instead around the 15ppm as currently). I do claim the tax relief annually for the remaining difference to the 45ppm.
The employer records the business mileage driven when expenses are claimed.
Rather than claiming the business mileage if I am going to exceed the cap, could I alternatively (and legally) choose to claim the full tax relief on 45ppm for the extra over mileage beyond the cap to avoid the company car if I did not want to risk being forced into one?
To set the scene, I am looking at maybe only a 1 - 2 k miles over the cap at most, which is why I am (currently) resistant to the company car as you can imagine.
Thanks!
It sounds like you're suggesting not claiming the extra miles as business miles with your employer, but then still claiming them as business miles against HMRC, unless I'm misunderstanding?
If that's correct, on top of anything else, isn't there a risk that you can't prove to HMRC the business miles you're claiming if you were ever called upon to do so?
If that's correct, on top of anything else, isn't there a risk that you can't prove to HMRC the business miles you're claiming if you were ever called upon to do so?
Yes that's right.
No I hadn't considered the issue of evidence to HMRC if they wanted to query.
That suggests I will have to see how literal they enforce the cap or if there is some leeway as it's not in their interest either because it lands them with another (greater) cost than just paying me an allowance.
Thanks for the help guys, much appreciated.
No I hadn't considered the issue of evidence to HMRC if they wanted to query.
That suggests I will have to see how literal they enforce the cap or if there is some leeway as it's not in their interest either because it lands them with another (greater) cost than just paying me an allowance.
Thanks for the help guys, much appreciated.
DickP said:
I am looking at maybe only a 1 - 2 k miles over the cap at most
It is highly probably that there's scope of margin within which that excess would fall. You may exceed the miles this year by 2k but such is vagaries of business, next year you may fall back below the cap level. It wouldn't make sense to give you a company car one year and withdraw it the next so I would imagine there would need to be consistent evidence of milage over a set period of time for the switch to take effect. had a similar situation; options were (a) don't do the extra miles - go by train, car share; remote meetings etc etc, (b) do the miles but claim under the cap (c) go for the company car ... a pool car as an interim step in my case ...
The company car ordering process stalled due to a re-org, I left before getting a car, had a pool car instead for a while; thankfully had not sold my car and used that when the pool car was returned
The company car ordering process stalled due to a re-org, I left before getting a car, had a pool car instead for a while; thankfully had not sold my car and used that when the pool car was returned
I had this a pre-covid.
The solution I found was to use a hire car, claiming the cost of the rental and fuel as a business expense agains the client - and created a zero mileage usage.
It worked perfectly and I became a very good customer of Enterprise and they let me pick and choose what I wanted week to week (i rented Sunday to Thursday) which was great and I got to sample loads of makes/models over the course of about 6mths.
The solution I found was to use a hire car, claiming the cost of the rental and fuel as a business expense agains the client - and created a zero mileage usage.
It worked perfectly and I became a very good customer of Enterprise and they let me pick and choose what I wanted week to week (i rented Sunday to Thursday) which was great and I got to sample loads of makes/models over the course of about 6mths.
In principle it is acceptable to HMRC to claim tax relief on business mileage that has not been reimbursed by your employer. I've done this in the past when I worked for a company that had a policy that they would only reimburse the lesser mileage of home or office to site - I lived 30 miles or so north of the office, and 95% of site visits were south of the office. Got me an extra few hundred quid tax rebate for about 15 minutes of effort.
The onus would be on you to prove you made the journeys and they met the usual tests for legitimate business mileage (primarily that it were not commuting). I kept a simple spreadsheet of date, journey, purpose, total mileage, total cost at HMRC rate, mileage reimbursed, cost reimbursed, claim amount for tax return
Obviously the actual amount you receive will be the claim amount multiplied by your marginal tax rate (so 20/40/45%).
The onus would be on you to prove you made the journeys and they met the usual tests for legitimate business mileage (primarily that it were not commuting). I kept a simple spreadsheet of date, journey, purpose, total mileage, total cost at HMRC rate, mileage reimbursed, cost reimbursed, claim amount for tax return
Obviously the actual amount you receive will be the claim amount multiplied by your marginal tax rate (so 20/40/45%).
x5tuu said:
I had this a pre-covid.
The solution I found was to use a hire car, claiming the cost of the rental and fuel as a business expense agains the client - and created a zero mileage usage.
It worked perfectly and I became a very good customer of Enterprise and they let me pick and choose what I wanted week to week (i rented Sunday to Thursday) which was great and I got to sample loads of makes/models over the course of about 6mths.
This, just rent something and expense it.The solution I found was to use a hire car, claiming the cost of the rental and fuel as a business expense agains the client - and created a zero mileage usage.
It worked perfectly and I became a very good customer of Enterprise and they let me pick and choose what I wanted week to week (i rented Sunday to Thursday) which was great and I got to sample loads of makes/models over the course of about 6mths.
Why not simply not claim the mileage that puts you over and just suck it up as for the greater good?
2,000 miles at 15p is £300 in lost expenses and £240 in lost reclaimable tax (30p x 2000 x 40%) assuming the top rate of 40%. I might be misunderstanding it as it’s been a while since I claimed tax back on mileage.
If I’m right it’s £45 a month in lost money. Is this better for you than being forced into a company car? Both financially and lifestyle?
2,000 miles at 15p is £300 in lost expenses and £240 in lost reclaimable tax (30p x 2000 x 40%) assuming the top rate of 40%. I might be misunderstanding it as it’s been a while since I claimed tax back on mileage.
If I’m right it’s £45 a month in lost money. Is this better for you than being forced into a company car? Both financially and lifestyle?
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