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Tony Tax
Tony Tax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Mileage Expences. I work as a Relief Court Security Officer

Resolved Question:

Mileage Expences.
I work as a Relief Court Security Officer and travel to different Courts around the midlands. I was told at my interview that I would receive 45p per mile travel expences. Since starting the job I have been told by my manager that I must claim my mileage minus 40 miles per day, for example if my weekly mileage is 325 miles, minus 40 miles a day, I can claim for 125 miles at 45p a mile, total £56.25.
All petrol receipts must be sent to payroll when applying for mileage, I have now discovered that if the receipt is less than the amount I am claiming for they will not pay me the extra, for example if I have spent £50 on petrol in that week then I will not receive the £56.25 as it exceeds the amount on the receipt. I believe that the HMRC advisory fuel rates of 45p per mile is to cover insurance, road tax, wear and tear and the running costs of your car, not just fuel.
One of my fellow Officers has called payroll and asked for expences to be explained in writing, this was refused and he was told to speak to his line manager.
Can you please advise me of what my rights are,
Thank you
Heather Maxwell
Submitted: 10 months ago.
Category: UK Tax
Expert:  Tony Tax replied 10 months ago.

Hi.

An employer can pay any amount or nothing at all to its employees as a mileage allowance. The figures published by HMRC are "advisory", not legally enforceable on an employer. I know several people who use their own cars for business mileage who receive no allowance from their employers. They claim tax relief on their business miles from the tax office.

 

The figure of 45p per mile for the first 10,000 business miles is what an employer can pay to an employee which is tax free in the hands of the employee. Over and above 10,000 miles, the most that can be paid tax free is 25p per business mile.

If an employee receives 25p per business mile for 15,000 business miles, they will be paid £3,750 tax free. Given that the maximum tax free sum that can be paid for 15,000 business miles is £5,750 the employee can claim tax relief from HMRC on the difference of £2,000. That is worth £400 in tax terms for a 20% taxpayer and £800 in tax terms for a 40% taxpayer.

Take a look at the notes here for more information. Frankly, the fact that your payroll people have not been able to explain how the mileage allowance system works and how it interacts with tax is poor.


I hope this helps but let me know if you have any further questions.

Customer: replied 10 months ago.


Thank you, XXXXX XXXXX you understand from the fact that they offer 45p minus 40 miles a day but then do not pay it when receipt does not add up to the amount on the claim form? and am I right in saying the 45p should include wear and tear, running costs?


 


Heather

Expert:  Tony Tax replied 10 months ago.

Different employers operate the mileage allowance scheme in different ways. You would need to ask your employer why they deduct 40 miles per day from what they pay you. There is nothing to stop them doing what they want including paying nothing as I said previously.

The allowance is deemed to cover all the running costs of the car including finance costs, fuel costs, insurance, MOT, servicing, repairs, road fund licence, everything but parking fees and road tolls.

If you received nothing from your employer, you would be able to claim tax relief on 45p per business mile for the first 10,000 miles and 25p per business mile in excess of 10,000. As it is, at the end of the tax year, you should tot up your business miles, calculate the maximum allowance that you could have received, compare that to the amount you actually received from your employer and claim tax relief on the difference if the amount you could have received tax free is more.

Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14165
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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