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After a bit of help on the above if anyone has any experience. I’ve never done this before and didn’t realise I could claim anything back until a colleague told me about it a couple of days ago. I opted out of the company car scheme in March 2018 so have nearly 5 years’ worth to claim, which I believe is just ok.
I’ve tried to fill out an online P87 for the first year April 2018-2019, in which time I did 8125 miles which works out at £3,656.25 and the company paid me back £801.45. Difference therefore is £2,854.80.
When I get the end it’s telling me that as the figure is over £2,500.00 I need to fill out a self-assessment. But surely I’m only trying to claim 20% of the figure, so £570.96? Am I doing something wrong, or do I actually need to do a self-assessment for one years claim (the other years will be less than £2,500.00 based on the above calculation).
I think I’d just do the self assessment.
No you are looking to claim back the £2854.80 afaik.
Mileage rate is 45p , company has paid you 10p a mile (?) , so you are claiming the difference.
I assume you have kept logs and fuel receipts for all those journeys as your company has paid you some money for them.
You don't get the £2854.80 back, it classed as an expense you incurred for work, and will be deducted from your taxable income (so effectively you get the tax back on it at whatever rate you pay tax).
If you do a tax return then you'll be doing them every year from now on, I would suggest using something like taxcalc to do it as it's quite simple and can submit the return for you.
You can also claim quite a few other things depending what your job is (uniform allowance. WFH allowance etc), taxcalc has guides on what you can claim built in
I and my work mates each did a claim well over 10years ago, we all got back around 25-40% of what the form said we should 🤷♂️ no explanation from HMRC.
You don’t get the £2854.80 back, it classed as an expense you incurred for work, and will be deducted from your taxable income (so effectively you get the tax back on it at whatever rate you pay tax).
Ah , I was getting mixed up with something else.
@homer
So they are only paying 10p a mile ( plus your tiny bit of tax relief). And you are meant to pay for fuel, servicing , tyres etc as well as whatever the extra is on your insurance to cover you for business use) . One might say they are taking the piss 😉
I'm not sure your mate is correct as it's a company car. 45p and 25p are rates for a private car on business milage.
Sorry, just re-read it and noticed the opted out bit. As you were.
Plus if your company are only giving you 10p per mile, that's astoundingly poor.
What you get is the tax back on the difference. If the difference is £2800 you’ll need to do a self assessment and you’ll get 20% back. They will then adjust your next years tax code so you pay less tax.
Not sure how that works with doing several years worth of claims though.
For why it’s worth I’ve been doing this several years, the first year I was under £2500 so did the p87 and waited about 6 months for a cheque. Following years I was over so self assessed, it takes me about 30 mins to do and I get paid within 7 days.
Only pain was as they adjust your tax code so you pay less tax (and therefore get a smaller or no payout in subsequent years) when covid hit and my mileage dropped off a cliff I ended up underpaying tax and owing about grand.
Do they really only pay you 10p a mile or is there a fixed payment as well?
That’s basically you paying to drive for work
Thanks for the responses, I'll look to do a self assessment then.
Regarding the 10p, the company I work for pay the recommended government rate, which at that time was 10p per mile. As I opt out of the company car scheme, I also receive an opt out payment each month, which is taxed etc. to cover maintenance. So the 10p is pretty standard as far as I'm aware, the opt out payment is a piss take as in the 16 years I've been a company car driver, it's never increased!
What you get is the tax back on the difference. If the difference is £2800 you’ll need to do a self assessment and you’ll get 20% back. They will then adjust your next years tax code so you pay less tax
Top tip, if your business mileage is variable from year to year, don’t let HMRC adjust your tax code, do the P87 claim each year. If your mileage is a lot lower one year, you can accidentally end up paying too much tax and vice versa if the code is adjusted.
Regarding the 10p, the company I work for pay the recommended government rate, which at that time was 10p per mile
Where did you see 10p per mile was gov rate? It's been 47p or similar for a long time as far as I am aware?
Where did you see 10p per mile was gov rate? It’s been 47p or similar for a long time as far as I am aware?
I think 10p is the mileage rate for a company car driver that puts in their own fuel. The fact that OP gets an allowance to compensate for that lower rate complicates the matter. I suspect you can't clam the tax relief plus receive an allowance, but I don't actually know.
I think 10p is the mileage rate for a company car driver that puts in their own fuel. The fact that OP gets an allowance to compensate for that lower rate complicates the matter. I suspect you can’t clam the tax relief plus receive an allowance, but I don’t actually know.
You used to be able to. Its been a couple a years since I was deep in this topic.
We did have an ethical debate on if you should. Most companies pay you an allowance to cover the provision of a car, its maintenance etc. If you then claim the tax relief on the 10-47p gap are you claiming for something you have already been compensated for? As the 47p higher mileage rate also aims to cover some of what the monthly company allowance covers.
Given the ethics of our current leadership I would have no issue claiming it!
Given the ethics of our current leadership I would have no issue claiming it!
Not an unreasonable position.
@TheBrick the rates are issued by HMRC, it's currently 14p.
https://www.gov.uk/guidance/advisory-fuel-rates
And I guess db has a point about it being ethical but since the colleague told me I've asked 3 others in the same position and they do it as well.
I claim the difference as tax relief. It's not unethical in the slightest. HMRC deem 47p to be the advisory rate for running costs of using a car for business miles. HMRC deems it to be there to cover the cost of fuel, servicing, maintenance, depreciation and insurance/road tax. Your company doesn't pay you the full amount, so you are spending the remainder out of pocket. Therefore you shouldn't be paying tax on it as it is a 'business expense' you are incurring.
Any car allowance you also receive is a separate benefit, taxed in its own way. It's up to you to negotiate the value of it with your employer and HMRC tax it at the applicable rate as it is a benefit, not reimbursement for an expense.