Verbal/Prov Job Offer, Tax status of "travel allowance"
Discussion
Evening all,
as above, i have verbally/provisionally been offered a job (through the recruitment consultancy that found the role for me). all details are fairly standard aside from the "travel allowance". i have been specifically offered an amount that sits outside of my basic salary (not lumped together.) because of this, is it subject to any different/lesser taxes?
to give the complete picture, i have asked for clarity on this but wont recieve this till early next week, yes a little convoluted but i am dealing with this through the agency (who have been good to be fair).
i am a construction professional that would be travelling from home to a construction site, not a permanent place of work as i will be there for under 24 months.
does anyone have any experience of these travel allowances? eventhough it is a seperate figure to the basic, would it be normal for it to be taxed any differently to my salary?
basic stuff i know but id appreciate any experiences/knowledge or advice.
as above, i have verbally/provisionally been offered a job (through the recruitment consultancy that found the role for me). all details are fairly standard aside from the "travel allowance". i have been specifically offered an amount that sits outside of my basic salary (not lumped together.) because of this, is it subject to any different/lesser taxes?
to give the complete picture, i have asked for clarity on this but wont recieve this till early next week, yes a little convoluted but i am dealing with this through the agency (who have been good to be fair).
i am a construction professional that would be travelling from home to a construction site, not a permanent place of work as i will be there for under 24 months.
does anyone have any experience of these travel allowances? eventhough it is a seperate figure to the basic, would it be normal for it to be taxed any differently to my salary?
basic stuff i know but id appreciate any experiences/knowledge or advice.
It depends if it is broken down into 2 categories which, in the WRA for Construction, it is.
The "fares" element of the travel allowance is paid free of tax and the "time" element is taxed at the same rate as your salary.
If the travel allowance hasn't been broken down as above, it will all be taxable but you can claim for travel to a temporary place of work on your self assessment at the end of the tax year.
Alex
The "fares" element of the travel allowance is paid free of tax and the "time" element is taxed at the same rate as your salary.
If the travel allowance hasn't been broken down as above, it will all be taxable but you can claim for travel to a temporary place of work on your self assessment at the end of the tax year.
Alex
Many thanks for this.
new to self assessment so just to give an example of my situation, how would this practically work...
My season ticket costs £8k per year, I am in the higher (not highest) tax bracket. Practically, how much (if any) of the £8k would I be able to claim back?
Many thanks again.
new to self assessment so just to give an example of my situation, how would this practically work...
My season ticket costs £8k per year, I am in the higher (not highest) tax bracket. Practically, how much (if any) of the £8k would I be able to claim back?
Many thanks again.
Edited by M777CUS on Saturday 4th January 21:58
It depends how many miles it is to your place of work. And how much your travel allowance is.
I'll make some assumptions and give an example based on one days travel to and from a temporary place of work.
if it's 100 mile round trip per day and your taxed travel allowance equates to £20, HMRC says you can claim tax relief on the difference between what you actually receive and what they set the rate at.
In the above example HMRC say you are allowed £0.45ppm (for the first 10,000 miles) so would be entitled to £45. The difference is £25 and as a higher rate tax payer you can claim 40% of this so £10.
Once you exceed 10,000 miles, HMRC say you are entitled to £0.25ppm so the amount of tax relief you can claim is reduced.
Hope that helps
I'll make some assumptions and give an example based on one days travel to and from a temporary place of work.
if it's 100 mile round trip per day and your taxed travel allowance equates to £20, HMRC says you can claim tax relief on the difference between what you actually receive and what they set the rate at.
In the above example HMRC say you are allowed £0.45ppm (for the first 10,000 miles) so would be entitled to £45. The difference is £25 and as a higher rate tax payer you can claim 40% of this so £10.
Once you exceed 10,000 miles, HMRC say you are entitled to £0.25ppm so the amount of tax relief you can claim is reduced.
Hope that helps
Ah but I see you will be travelling by train so the above may not apply to you!
This page may help http://www.hmrc.gov.uk/incometax/relief-travel.htm...
Basically you can claim tax relief on you travel expenses at your current rate of tax. That being the case, you would be better off receiving an all inclusive salary without reference to travel allowance, allowing you to claim tax relief on the whole £8000 at 40% (£3200)
All this is of course assuming that your Contract of Employment cites your permanent place of work as the Companies Head Office or somewhere other than the site where you will actually be based.
Edit to add: if your employer insists on paying you a salary plus travel allowance the amount of tax you can reclaim will be reduced. For example if your annual railcard is £8000 and your employer pays you a £6000 travel allowance, you can only claim tax relief at 40% on the difference (£2000) giving you £800.
This page may help http://www.hmrc.gov.uk/incometax/relief-travel.htm...
Basically you can claim tax relief on you travel expenses at your current rate of tax. That being the case, you would be better off receiving an all inclusive salary without reference to travel allowance, allowing you to claim tax relief on the whole £8000 at 40% (£3200)
All this is of course assuming that your Contract of Employment cites your permanent place of work as the Companies Head Office or somewhere other than the site where you will actually be based.
Edit to add: if your employer insists on paying you a salary plus travel allowance the amount of tax you can reclaim will be reduced. For example if your annual railcard is £8000 and your employer pays you a £6000 travel allowance, you can only claim tax relief at 40% on the difference (£2000) giving you £800.
Edited by alex290568 on Sunday 5th January 10:11
alex290568 said:
Ah but I see you will be travelling by train so the above may not apply to you!
This page may help http://www.hmrc.gov.uk/incometax/relief-travel.htm...
Basically you can claim tax relief on you travel expenses at your current rate of tax. That being the case, you would be better off receiving an all inclusive salary without reference to travel allowance, allowing you to claim tax relief on the whole £8000 at 40% (£3200)
All this is of course assuming that your Contract of Employment cites your permanent place of work as the Companies Head Office or somewhere other than the site where you will actually be based.
Edit to add: if your employer insists on paying you a salary plus travel allowance the amount of tax you can reclaim will be reduced. For example if your annual railcard is £8000 and your employer pays you a £6000 travel allowance, you can only claim tax relief at 40% on the difference (£2000) giving you £800.
this clarity is really great, thank you. This page may help http://www.hmrc.gov.uk/incometax/relief-travel.htm...
Basically you can claim tax relief on you travel expenses at your current rate of tax. That being the case, you would be better off receiving an all inclusive salary without reference to travel allowance, allowing you to claim tax relief on the whole £8000 at 40% (£3200)
All this is of course assuming that your Contract of Employment cites your permanent place of work as the Companies Head Office or somewhere other than the site where you will actually be based.
Edit to add: if your employer insists on paying you a salary plus travel allowance the amount of tax you can reclaim will be reduced. For example if your annual railcard is £8000 and your employer pays you a £6000 travel allowance, you can only claim tax relief at 40% on the difference (£2000) giving you £800.
Edited by alex290568 on Sunday 5th January 10:11
i am yet to get sight of the offer so im unsure of the wording of the contract with regard the permanent place of work, i am sure that it wouldnt state the actual site ill be based on as the project has not been secured as of yet.
what would be the benefit (or not) of a company insisting that they are providing me with a travel allowance? i am just weighing up wether it would be in there interests to remove the travel allowance and just show it as salary.
if they werent to do that, is there anyway this could be subject to a different type of tax?
I don't think there is any benefit (to the Company) in the company paying you a salary or travel allowance. The only possibility is that the Company may not have to pay employers NI contributions on travel allowance.
The next thing to do is find out if the travel allowance is subject to employees tax and NI. I suggest you ask them once you get closer to securing the deal. If it is, ask them to pay it all as salary instead thus allowing you to claim maximum tax relief on your travel expenses. If it isn't, you have nothing to worry about.
The next thing to do is find out if the travel allowance is subject to employees tax and NI. I suggest you ask them once you get closer to securing the deal. If it is, ask them to pay it all as salary instead thus allowing you to claim maximum tax relief on your travel expenses. If it isn't, you have nothing to worry about.
alex290568 said:
I don't think there is any benefit (to the Company) in the company paying you a salary or travel allowance. The only possibility is that the Company may not have to pay employers NI contributions on travel allowance.
The next thing to do is find out if the travel allowance is subject to employees tax and NI. I suggest you ask them once you get closer to securing the deal. If it is, ask them to pay it all as salary instead thus allowing you to claim maximum tax relief on your travel expenses. If it isn't, you have nothing to worry about.
Alex, thank you very much, youve been a great help. The next thing to do is find out if the travel allowance is subject to employees tax and NI. I suggest you ask them once you get closer to securing the deal. If it is, ask them to pay it all as salary instead thus allowing you to claim maximum tax relief on your travel expenses. If it isn't, you have nothing to worry about.
alex290568 said:
I don't think there is any benefit (to the Company) in the company paying you a salary or travel allowance. The only possibility is that the Company may not have to pay employers NI contributions on travel allowance.
AIUI Car Allowance is taxable/NI'able if no mileage claims are submitted (i.e. it's treated no different to salary unless you can prove you have done X miles). The taxable benefit is on a sliding scale, so the more mileage you do the less tax you pay.Countdown said:
AIUI Car Allowance is taxable/NI'able if no mileage claims are submitted (i.e. it's treated no different to salary unless you can prove you have done X miles). The taxable benefit is on a sliding scale, so the more mileage you do the less tax you pay.
Have you been away for a while? The mileage bands for car BiK went years ago, and the rate for using your own car on business drops after 10,000 miles per annum.Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff