Do we have any tax experts here today?
I'm completing my Self assessment form, online, and am struggling with this scenario:
Following a company policy change, I now use my private car for business use. Under the Inland Revenue Fixed Profit Car Scheme (FRPS), I am entitled to claim 63p per mile for the first 4000 miles, then 36p per mile thereafter. My employer only pays a maximum of 45p and 25p respectively. "You should claim the difference from the Inland Revenue" we were told.
Using hypothethical numbers, I travel 4000 miles and claim 45p from my employer. (£1800). I then claim the difference of 18p per mile (63p-45p) from the inland revenue, and expect to receive £720.
The question is, am I right?
The alternative solution is that I claim the 45p from my employer, but the £720 is merely offset against income by the IR and I receive considerably less than £720.
Does anyone know which scenario is correct. Specifically, is the £720 paid as a tax free expense by the IR or is it offset against taxable income?
|
Michael,
Your second scenario is correct. You will claim tax relief on the difference between what your employer pays you and the gov't limit of 63p.
The difference of £720 then effectively increases your tax code, and gives you 40% of that back (for a higher rate taxpayer).
You also need to be aware that the 63p will be falling for larger engined cars next year.
Hope this helps .......
Robert
|
|
|
|
Thanks Robert, that confims my thoughts. Shame my employer didn't make it clear last year when they implied the full amount was claimable but then their agenda was to make the policy change palatable. I knew about the reduction next year and have already downsized.
|
|
|
Do I read this right? If I use my own car on company business then I can claim tax back even though my employer gives me a mileage contribution? I dont do a lot of business miles, probably about 2000 per year and I get "paid" 14 pence per mile plus 1 gallon of petrol for every 20 miles I do. As I tend to use the bike and get 40+ to the gallon then I make on that, but I am always willing to take a contribution from the tax man.
Bill
|
Bill you can claim, you need a P87 from your local tax office and get the leaflets IR125 and 1R161. If I remember correctly you can go back up to 6 years. The form is very tedious to fill out.
as ever
Mark
|
|
|
Bill you can claim, you need a P87 from your local tax office and get the leaflets IR125 and 1R161. If I remember correctly you can go back up to 6 years. The form is very tedious to fill out.
as ever
Mark
|
|
|
Bill,
Thats a bit more difficult as you are getting "paid" two different sums:
14 pence a mile + aprox 17 pence per mile for the 1/20th gallon bit. This makes a total of 31p per mile.
The 63p per mile allowance bit is for a car of over 2000 cc and only for the first 4000 miles. Still, it appears that you can claim the difference between the "31p" (or whatever the actual number appears to be at the end of the tax year) and the 63p (or whatever) as tax relief.
Regards ............... Robert
|
|
|
|
Thanks Mark and Robert, I will investigater further and look for more than the 14p and the gallon I get at the moment.
Bill
|
I have claimed this tax relief successfully and consistently for the last few years, though with a 1995cc vehicle, it was the difference between the Revenue's 45p limit at 4,000 miles, and the 25p per mile my employer paid.
There are two methods - the "simple" method, whereby you multiply the number of miles you've done (up to 4,000) x 45p, then deduct from this figure what you've actually been paid. With this method, you cannot claim for previous tax years, only the current one. Alternatively, you can use the "exact" method, which requires you to keep every receipt for expenditure. Using the "exact" method you can claim up to 6 years arrears - a tall order if you've just found out about the relief!
|
|
|
|
|
However, don't forget to be sure that your insurance covers you for business use. This can be a substantial cost - especially if you have an accident.
|
|
|
