Layman’s terms on car allowance
Discussion
Hi, had a look on google but everyone has a different view on this,
I started a new job and was given a car allowance and told to claim back the mileage but for the miles I drive they pay back 0.14p per mile as per HRMC fuel rates? (Diesel car), at 0.14p this just covers the fuel cost…
At the end of each year do I get a tax rebate as I was always led to believe you get 0.45p per mile? Or is the company in question not great? They do offer a car but I would then loose my car allowance and for the cars they have I would prefer to drive something I like…
I started a new job and was given a car allowance and told to claim back the mileage but for the miles I drive they pay back 0.14p per mile as per HRMC fuel rates? (Diesel car), at 0.14p this just covers the fuel cost…
At the end of each year do I get a tax rebate as I was always led to believe you get 0.45p per mile? Or is the company in question not great? They do offer a car but I would then loose my car allowance and for the cars they have I would prefer to drive something I like…
Yes you can claim
At the end of each financial year you claim the tax relief (depending on your tax band) back on the rest of the 45p.
If you do 10000 miles you would claim the relief on 31ppm (45p-14p) they have refunded you for the fuel already. It’s the tax relief on the rest. How many mile do you do?
You will pay tax on the amount they give you in allowance but not pay company car tax.
What are they giving you in allowance gross?
At the end of each financial year you claim the tax relief (depending on your tax band) back on the rest of the 45p.
If you do 10000 miles you would claim the relief on 31ppm (45p-14p) they have refunded you for the fuel already. It’s the tax relief on the rest. How many mile do you do?
You will pay tax on the amount they give you in allowance but not pay company car tax.
What are they giving you in allowance gross?
loskie said:
no but you can claim tax relief on it.
They are shafting you (not HMRC your employer)
Unless it's written into your contract to provide a car then I would not provide a car at this rate. You are subsidising your employer's business.
They're not really shafting anyone. It's pretty normal to pay a car allowance and then a reduced rate per mile. 45p is what you would get for just using your own car ad-hoc that isn't funded by an allowance, so if the employer is already paying a few hundred quid a month to the cost of the car it's perfectly fair.They are shafting you (not HMRC your employer)
Unless it's written into your contract to provide a car then I would not provide a car at this rate. You are subsidising your employer's business.
However, as it's a personally owned car and the car allowance is just taxed income to HMRC, you are still entitled to 45p/mile (then 25p/mile after 10k miles) so can claim tax relief on the difference (not the actual difference). Business mileage only obviously.
What car are you driving?
That 4.5k is fairly low and less that £400 per month before tax.
For contrast I pay my people on the road £750 before tax.
Could you take a company car? Any electric or salary sacrifice schemes as you could be better off.
That 4.5k is fairly low and less that £400 per month before tax.
For contrast I pay my people on the road £750 before tax.
Could you take a company car? Any electric or salary sacrifice schemes as you could be better off.
Edited by interstellar on Sunday 5th November 22:39
For comparison I get £6k per annum car allowance before tax (40% tax payer), and fuel reimbursement is the HMRC advisory rates (think currently 14ppm). I claim back the tax difference end of year which bumps it up to equivalent somwhere in the high teens or low 20s ppm.
The car allowance I have would have been appropriate I think five years ago. Now with prices as they are, they fall massively short. The company car option is punitive unless electric unfortunately, though you wouldn't have to worry about road tax, insurance or maintenance costs. A mild hybrid Octavia would be £3-4k per annum in BiK for example, and I would be without car allowance so in effect take a £6-7k drop in income (after tax) vs providing the car myself and managing expenditure.
Not sure what I will do when it comes to replacing my current car, might end up going company car route if second hand prices don't revert to akin what they were three years ago.
The car allowance I have would have been appropriate I think five years ago. Now with prices as they are, they fall massively short. The company car option is punitive unless electric unfortunately, though you wouldn't have to worry about road tax, insurance or maintenance costs. A mild hybrid Octavia would be £3-4k per annum in BiK for example, and I would be without car allowance so in effect take a £6-7k drop in income (after tax) vs providing the car myself and managing expenditure.
Not sure what I will do when it comes to replacing my current car, might end up going company car route if second hand prices don't revert to akin what they were three years ago.
Edited by DickP on Monday 6th November 13:30
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