As the HMRC website is tough reading I'm looking for some advice/info on using my own car for work purposes. I use my car for work (business insurance etc) and can claim 45p p/mile from work for any business related mileage. I submit a monthly expenses and get a BACS payment a couple of weeks later (separate to my wage). Of that amount of expenses I get, do I pay tax on it?
Upto 10,000 miles no. Over that it's a reduced rate you should be claiming or paying tax on the difference http://www.hmrc.gov.uk/rates/travel.htm
I have experience of this working through agencies for the last 6 years. You don't pay tax on your on your expenses provided they are within HMRC limits. You can even claim tax back if you use your car for your employers business and your employer doesn't pay you expenses. You can still claim when you go over 10k miles but the rate drops to 25p a mile. If your employer still paid you 45p a mile you would pay tax on 20p of it. I am waiting for a tax refund at the moment.
First 10k BUSINESS miles you can be paid a tax free allowance of 45p per mile Anything above is at 20p per mile if you get paid less than those rates then you can claim the difference as an allowance
I'm pretty sure that it's 25p per mile over 10,000 miles. So if you drive 15,000 business miles reimbursed at 45p a mile then you're liable to income tax on: (15,000 x 45p)-(10,000 x 45p + 5,000 x 25p) = £1000. Assuming you're a higher rate tax payer then you owe £400 in tax. As mentioned, if the calculation gives you a negative figure then you can claim a deduction when calculating your other taxable income. It's worth noting that you can claim an additional 5p per mile for each passenger you take with no limit on the number of miles nor the number of passengers (providing you're still driving a car, there's different rates for vans). It's also worth noting that for NIC purposes the flat rate of 45p applies irrespective of the number of miles.
