Ninehigh
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| posted on 21/5/13 at 08:46 AM |
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Any tax people about?
I'm completely lost on this one and HMRC can't work it out either.
A few months ago I found out I was entitled to 49p per mile for travelling to work, so I looked into this (it's for travelling to places that
are not your normal place of work, 49ppm for the first 10k, 25ppm after that)
Then after a long back and forth which I shan't go into I finally put the claim in for over 14,000 miles travelled for work from last June until
the end of March, a figure just short of £5500.
Now my tax return says I'm getting £780. How?
Apparently I'm entitled to the (20%) tax on 49ppm, but where does that 49p come from? Where do I get that? I've not been paid that
much for travel to begin with and now works out at LESS than what the company's paying for me.
So yeah HMRC refuse to explain any further and I feel like I've been ripped off by about 3 month's worth of pay (a.k.a more money than
I've ever dealt with ever) I guess I've got to wait 48 days for the complaint to be ignored before I start throwing laws and fact at them,
does anyone have anything?
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coozer
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| posted on 21/5/13 at 08:57 AM |
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You need a good accountant.. I am working on 45p a mile, thats the amount I was told.. that or work out business v personal mileage.. I stuck with the
45p for simples... thats me...
I'm just starting down the road of self assessment.....
1972 V8 Jago
1980 Z750
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tilly819
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| posted on 21/5/13 at 09:56 AM |
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I believe but may be wrong that your employer can pay you up to 45 pence per mile without there being any tax implications, anything over this then
you have to start paying tax.
Tilly
F20C Haynes roadster 440 BHP/Tonne www.youtube.com/handmadeextreme
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whitestu
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| posted on 21/5/13 at 10:06 AM |
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You are entitled to claim tax relief for using your own car on business. Simply if you do 14k miles you get 10000 x 45p + 4000 x 25p [see
www.hmrc.gov.uk/rates] = £5500. So you get either 20% or 40% of £5500 knocked off your tax bill, depending on your tax band. So either £1100 or £2200
off your bill.
This assumes that your employer doesn't pay you a mileage rate. If it does you have to knock this off your claim.
You'll need to do self assessment to claim this though.
Stu
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nick205
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| posted on 21/5/13 at 10:06 AM |
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Also working on £0.45/mile for business mileage in a private car. My understanding (from our work accountant) is the company/employee can agree a
higher amount, but the employee will be taxed on the difference.
My rule of thumb on tax has always been; work out what you owe them and multiply by 1.5 to get the figure they think you owe them.
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MikeR
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| posted on 21/5/13 at 10:10 AM |
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I'm not a tax accountant.
I'm assuming you're an employee of a company.
The company can pay you an allowance for mileage. The Gov. allows up to 45p (i think, not heard 49p before) a mile for the first 10k, then its 20p (or
what ever).
If your company pays less than these numbers you don't get taxed as you're not receiving a benefit, its just an expense you've
incurred they are reimbursing you for. If your company paid you £1 a mile, the 55p above the 45p limit would be classed as a benefit so you'd be
taxed (not sure if they tax the 45p, 55p or £1, id assume 55p).
If your company pays you less than the max, i think you can claim the difference from the gov (i think - i half looked into this years ago but never
got to the bottom of it so from now on could be complete twaddle). BUT you don't claim the difference, what you do is claim the tax back from
the difference.
So, your company pays you 10p a mile. You do 100 miles, you get 10p & 100 = £10.00
You claim back the difference of 35p * 100 miles from the gov = 35p*100=£35.00 but you're claiming the tax back so its 20% (or 40% if your
lucky) of £35.00 = £7. Depending how much this is it will get either off set against next years tax bill or you'll get a cheque. You'll
also have to fill in a self assessment tax form going forward.
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Ninehigh
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| posted on 21/5/13 at 10:18 AM |
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quote:
Originally posted by whitestu
You are entitled to claim tax relief for using your own car on business. Simply if you do 14k miles you get 10000 x 45p + 4000 x 25p [see
www.hmrc.gov.uk/rates] = £5500. So you get either 20% or 40% of £5500 knocked off your tax bill, depending on your tax band. So either £1100 or £2200
off your bill.
This assumes that your employer doesn't pay you a mileage rate. If it does you have to knock this off your claim.
You'll need to do self assessment to claim this though.
Stu
Oh yes and self assessment is the part I won't go into, let's just say it's the reason I hired an accountant last time I was self
employed.
So where does this 45p come from then if it's 10-20p? I've used more than that in petrol alone
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MikeR
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| posted on 21/5/13 at 10:43 AM |
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I used 10p as an example figure (And cause it was easy to do the maths with 10p cause I'm lazy).
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Doctor Derek Doctors
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| posted on 21/5/13 at 11:45 AM |
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Its not paid to you or knocked off you tax bill.
It taken from the money you are taxed on.
If you earn £100K and charged 40% tax you pay £40k tax
If you then submit expenses for 10K miles at 45p per mile you get £4500 that you aren't taxed on.
So the 40% tax would only be on £95.5k so you only pay £38.2k tax.
These are example numbers and its more compliacted that this but that is how it works. Essentially HMRC dont give you money they just dont tax you on
it.
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nick205
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| posted on 21/5/13 at 11:47 AM |
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http://www.hmrc.gov.uk/rates/travel.htm
This might help shed some light.
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ReMan
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| posted on 21/5/13 at 11:51 AM |
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My company pay 45p mile too.
But when I claim, its from my company, not HMRC.
And there is no tax liability to me at this rate
http://www.hmrc.gov.uk/mileage/employee-factsheet.pdf
www.plusnine.co.uk
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whitestu
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| posted on 21/5/13 at 12:08 PM |
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quote:
So where does this 45p come from then if it's 10-20p? I've used more than that in petrol alone
HMRC sets the rate. See the url in my previous post.
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JonnyS
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| posted on 21/5/13 at 12:13 PM |
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Most of the info on the thread is correct. As an accountant:
- You need to work out the amount you've been paid in mileage by your employer
- Deduct this from the £5,500 you could have been paid if the employer wasn't so stingy (10K at 45p, the rest at 25p)
- You will then have an amount which you can claim tax relief on it at your marginal rate- either 20% or 40%
This is the form you need to use if you aren't completing a tax return:
http://www.hmrc.gov.uk/forms/p87.pdf
This isn't meant to reimburse you for your fuel etc, it's just a way for people to get tax relief on legitimate expenses that the employer
doesn't reimburse.
[Edited on 21/5/13 by JonnyS]
[Edited on 21/5/13 by JonnyS]
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craig1410
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| posted on 21/5/13 at 12:29 PM |
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Hi,
I'm not an accountant but have been doing self assessment since 2001 and now run my own Ltd company where I get to deal with both sides of this
equation.
The 45p/25p numbers are figures agreed by HMRC to cover the cost of using a personal vehicle for business mileage. As you are no doubt aware, it costs
more than just the cost of petrol to keep a car on the road. Some of these costs are fixed (eg. road tax, finance costs or opportunity costs) and some
are variable (eg petrol) and some are a combination (insurance - due to mileage affecting premiums, servicing - due to mileage bringing forward
services, repairs - same reason)
So, HMRC say that you can be paid (by your employer) up to 45p per mile for the first 10000 miles and 25p per mile thereafter without incurring a
benefit in kind. Some employers will pay these exact figures (easiest for you) or will pay fuel cost only (say 15p/mile) or in some cases they will
pay you more than the HMRC allowance. Taking these in turn:
1. Employer pays you 45/25p per mile - you don't need to do anything. There is no tax relief and you owe no tax due to benfit in kind
2. Employer pays you 15p per mile to cover fuel only - you can submit a form (http://www.hmrc.gov.uk/forms/p87.pdf) to claim back tax relief on the
DIFFERENCE between what the HMRC allowance is and what you are paid by your employer. This would be (45-15) = 30p on the first 10000 miles and (25-15)
= 10p on the rest. This is tax RELIEF so will reduce the tax you pay at your prevailing rate (either 40% or 20%).
3. Employer pays you more than 45/25p per mile - your employer will complete a benefit in kind declaration for you on form P11D at the end of the tax
year to show that you were paid more than the HMRC allowance. I'm not 100% if your employer actually does this for you or if you have to do it
yourself through self assessment but either way, you owe tax at your prevailing rate on the difference between the amount reimbursed and what the HMRC
allowance permits you to be reimbursed.
So, assuming you are in the second category and were paid fuel costs at, say, 15p per mile:
14000 miles total = 10000 * 45 + 4000 * 25 = £5500 allowed by HMRC
If you were reimbursed by 15p * 14000 miles = £2100 then you need to subtract that from the £5500 to yield £3400 tax relief
If you are a 20% tax payer then this equates to a tax rebate of £3400 * 20% = £680 or if 40% tax payer = £1360 rebate.
I hope this helps,
Craig.
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JohnN
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| posted on 21/5/13 at 12:39 PM |
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HMRC allow your employer to pay you to visit a site, from home, that is not your normal place of work.
On the basis that your employer probably pays you only from work? the lesser of home to site or work to site etc?.
Then HMRC will refund the tax you have paid on your normal earnings which have already paid for the fuel, depreciation, wear and tear etc of that
component of the allowable rate for the allowable milage, less the milage your employer paid you for. ie 20% or whatever your top rate of tax is. ie
if you were a 40% taxpayer, you'd get 40% back
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Ninehigh
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| posted on 22/5/13 at 08:00 AM |
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I get paid after 20 miles, I have no normal place of work.
And by the look of things the 5k cheque I was expecting last week has just turned into effectively nothing (they'll adjust a number in their
system)
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craig1410
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| posted on 22/5/13 at 08:17 AM |
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quote:
Originally posted by Ninehigh
I get paid after 20 miles, I have no normal place of work.
And by the look of things the 5k cheque I was expecting last week has just turned into effectively nothing (they'll adjust a number in their
system)
If you don't have a normal place of work then why do you only get paid after 20 miles? Is this by any chance how far your nearest company office
is from you? Are you officially registered with your company as working from home?
Without more factual info from you it's difficult to advise further. At the moment it just sounds as though you misunderstood how mileage
allowances work. We're you misled by your employer on this?
C.
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Ninehigh
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| posted on 22/5/13 at 08:32 AM |
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My employer is one of those that tells you as little as possible about anything.
I don't have a normal place of work because I work where they tell me to. It's after the first 20 miles for no good apparent reason (since
the staff permenantly on each site don't get any travel allowance)
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Ninehigh
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| posted on 25/5/13 at 04:30 PM |
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Got a letter off hmrc today explaining that I've got £54xx added to my tax free allowance. As this all had been explained to me rather well here
they appear to have done what I thought they should have done in the first place. I'll be keeping that letter for when the excrement comes into
swift contact with a rapidly rotating cooling device next year 
Thanks for all the info!
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JoelP
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| posted on 25/5/13 at 04:41 PM |
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Look on the bright side, i used to get 14p a mile after the first 50 (which didnt get paid). So to travel to newcastle from leeds, id get about £4.
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craig1410
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| posted on 25/5/13 at 04:43 PM |
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Glad you got it sorted although tax relief of £54xx isn't quite the same as a cheque for £5k that you seemed to be expecting previously.
The best thing is to get the full 45/25p per mile directly from your employer and some will do that. In fact my previous employer would pay this to
anyone who wasn't receiving a car allowance or company car. If you had a car allowance (£500pm I was getting) then instead you could claim
fuel-only cost directly from the company and then claim the rest of the 45/25p per mile from HMRC as tax relief. You might wonder why I could still
claim the tax relief even though I was getting a car allowance of £500 per month. The answer is that that the car allowance was taxed at source just
like salary. In fact it was the same as salary except that it was not included when calculating employer pension contributions or holiday pay and
things like that.
Anyway, I hope you don't have any more problems. There are loads of people in your position who simply aren't aware they can claim this
money or are intimidated by the tax system and don't want to 'upset the applecart'. It's a shame really.
Cheers,
Craig.
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Ninehigh
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| posted on 26/5/13 at 03:52 PM |
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Oh I've had 15 years of them screwing me about and lying and losing information... If this is the last of it it's because they've
accepted me paying tax to France instead of here
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craig1410
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| posted on 26/5/13 at 07:33 PM |
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quote:
Originally posted by Ninehigh
Oh I've had 15 years of them screwing me about and lying and losing information... If this is the last of it it's because they've
accepted me paying tax to France instead of here
Life's too short to have feelings like that mate. If you're not being valued where you are then go get yourself the job you deserve!
Happiness is the ultimate success in life! It's out there waiting for you to find it!
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ceebmoj
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| posted on 26/5/13 at 09:10 PM |
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Did you post a bit back about having problems with HMRC? Did you get that resolved as well?
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Ninehigh
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| posted on 27/5/13 at 07:43 AM |
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quote:
Originally posted by ceebmoj
Did you post a bit back about having problems with HMRC? Did you get that resolved as well?
No!
I remember that one too though, that a P60 that they sent me was then regarded as an estimate when I sent it back to the same department...
Craig I'm not sure if I'm feeling valued on this planet, no wonder I want to start a moon colony!
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