mileage expense company business rate?

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Thu 6 Dec 2007 10:06
mileage expense company business rate? - A2B
What does your company give per mile for using your own vehicle on company businees?
Seems to me the rate is 40 pence / per mile which has not changed in some time. With the price of petrol rising should the rate not increase too?

Edited by Dynamic Dave on 06/12/2007 at 10:20

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Thu 6 Dec 2007 10:11
mileage expense comapny business rate? - ablandy
Any company who actually pays 40p per mile is missing a trick regarding tax. As mentioned elsewhere recently, there is tax relief on the difference.

The rate a company pays is completely up to them. HMRC have figure of 40p per mile, after which it is taxed. (rates change with higher mileage)

Given how the government is penalising company car drivers, i cant see any significant changes to this in the near future.
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Thu 6 Dec 2007 12:25
mileage expense comapny business rate? - Bill Payer
Any company who actually pays 40p per mile is missing a trick regarding tax. As
mentioned elsewhere recently there is tax relief on the difference.


...but you only get the tax back, not the full difference.

I also think you're confusing two separate schemes.

Generally, "opt-out" company car users get a monthly allowance (typically £400-£600) which is taxed as normal. Then they get a business mileage payment, typically 15p.
If they're 40% tax payers then they get 10p of tax refund, so a total of 25p. 25p is *not* better than (or equal to) 40p!

The 40p rate is usally paid to people who are casual car users and don't get any form of allowance.
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Thu 6 Dec 2007 10:25
mileage expense comapny business rate? - gramar
There are others voicing concerns that the 40p HMRC rate needs reviewing. This rate is paid to the majority of Local Government and Civil Service employees contracted to provide a suitable vehicle to carry out their jobs. I am one of those and have been on the 40p a mile rate for years. These rates have remained the same for over a decade and since the New Labour Government were first elected. The stagnation of these rates is now having an adverse affect upon the economic well being of people supplying their own vehicle for business purposes.

A petition on the 10 Downing Street e-petitions system has been started so I would encourage everyone affected to sign (closing date 8 April 2008). Very few people have signed to date so spread the word!!

petitions.pm.gov.uk/BusinessMileage/


Edited by gramar on 06/12/2007 at 10:26

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Thu 6 Dec 2007 13:01
mileage expense comapny business rate? - rtj70
This was in autoexpress this week... the 40p rate has not risen in ages but the cost of running the car has gone up by 25% in that time.

So are those opting out of company schemes going to reach a point where they are not better off and will opt back in again?
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Thu 6 Dec 2007 13:37
mileage expense comapny business rate? - hxj

The rate that employers pay is up to them.

The tax free rate will still make a significant contribution well over the average costs per mile incurred in running a car.
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Thu 6 Dec 2007 18:54
mileage expense comapny business rate? - spikeyhead {p}
I'm sure that most people would love to be able to run a car on 40p a mile for the first 10k miles and then 25p thereafter.

Doing high mileage means that the car needs to be comfortable and reliable. I've been using a Mondeo tdci from the last year and a bit. Realistically, depreciation will be about 2k per year, though that's only because I've got contacts in the trade that can find me good quality high mileage cars that have a chance of being reliable. Insurance and tax take up another £500 a year regardless of mileage, so that's £2500 a year without the running costs.

Say I do 20k miles a year on business. That's about £2000 a year on fuel, so that takes me up to £4500 a year. Its looking rosy at the moment, but then there's servicing and repairs, tyres, brake discs and pads which could easily add up to £1000 a year. It does mean that I can stay in credit but it's only possible keeping the depreciation low. If the depreciation climbs to £3k a year then I'm breaking even but that's difficult to do unless you run a car that's likely to end up costing more in repairs. In my case, if my car is off the road I can't get to work so I don't get paid, that leaves me out of pocket id the car is off the road for more than a couple of days a year.

and it would only take a set of injectors or a fuel pump to give way, which isn't that uncommon on a tdci and once again I'd be out of pocket.

So whilst it is possible to run a car on the limits allowed by the taxman, it really isn't easy for most people.
--
I read often, only post occasionally
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Thu 6 Dec 2007 19:17
mileage expense comapny business rate? - hxj

Your analysis is interesting, but assumes 100% business mileage, which has to be unusual.

If we take your costs of £5,500, round up to say £6,000 and assume 50% business use then for those 10,000 miles you get £4,500, which means that your 50% private motoring only costs you £1,500.

Hence the comment.
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Thu 6 Dec 2007 20:01
mileage expense comapny business rate? - Bill Payer
which means that your 50% private motoring only costs you £1 500.

That is one way of looking at it, but doing 20K/yr will soon destroy the value of most cars in depreciation terms, and it can be quite hard on the car itself in terms of extra repairs etc.

Spikeyhead says he has contacts that can get him good cars, and if you can buy 2-3 yr old cars with low mileage, run them for a couple of years then sell with average mileage, then maybe it can work out. But most people haven't got the time, skills, or inclination to do that.

Mrs BP is a Civil Servant and used to have to go out visiting people, but most calls were nearer home that her office, so she had to have business insurance, but she could rarely claim business mileage! Bizarrely, even though she didn't get the mileage paid, the journeys do still qualify for tax relief.
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Thu 6 Dec 2007 17:55
mileage expense comapny business rate? - Bill Payer
There are others voicing concerns that the 40p HMRC rate needs reviewing. This rate is
paid to the majority of Local Government and Civil Service employees contracted to provide a
suitable vehicle to carry out their jobs.


MP's used to get just under 60p/mile for the first 20K miles but that was reduced a couple of years ago the match the 40/25p 10K mileage rates - amongst much angst from some MPs!
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