Claiming mileage allowances, what are the rules/guidelines?

Question

For my job, I often have to visit clients around the UK, normally for a couple of days at a time, so most of the time I will use my own car to drive there and back.

My company pays £0.28 per mile, I'm not sure if that works out to cover my mileage well enough or not (1.6 astra)

I've found this post, and I would like to quote a few items

The Inland Revenue mileage rate is currently 40 pence per mile for the first 10,000 miles and 25 pence per mile thereafter in each financial tax year

The good news is if your employer pays you less than the mileage allowances then you are entitled to claim mileage allowance relief on the shortfall. If for example your employer pays 35p per mile then less than 10,000 miles you are entitled to claim the mileage allowance relief on the number of miles at 35p multiplied by the 5p shortfall.

Does this mean I'm entitled to claim the missing £0.12? Or am I just being a bit greedy?

Answer 1

I believe so (that you can, not that you are greedy)

I run my own business and, generally speaking, am 'charging' my company 40p per mile as per the quote above.

I did not know about the ability to claim the shortfall, as it is not relevant to me, but it makes perfect sense and I'm sure that a phone call to HMRC will help you understand how to claim.

As for the greedy question - personally I think that laws are there for a reason (both ways) so if there's money to be claimed - there's no reason not to do so, unless of course the hassle is greater than the potential gain.

One last note - not sure exactly what the rules around this are, but I know that the allowance is not applicable for one's general commute and so if you're travelling to the same place over 40% of the time for more than two years you are no longer allowed to claim these miles.

Answer 2

You are certainly able to offset the 12p per mile (up to 10,000 business miles per year) against your tax bill. You are also liable, should you do more than 10,000 miles in a tax year, to the tax on the 3p overpayment for mileage compensation over 10,000 per tax year. Depending on your marginal tax rate you could get 4p per mile reduction in the amount you pay the Inland Revenue under the 10,000 mile threshold / 1p per mile increase in the amount you pay the revenue for miles over 10,000 per tax year

It's up to you if it's worth the pain of claiming for the tax on a few miles.

I used to claim regularly. I was having to fill in a tax return anyway and my employers paid 25p a mile, I drove a lot of miles on their business, so I used to claim back the tax on £2,500 a year... at 40% marginal rate that was worth £833 to me, definitely worth the effort of claiming.

Oh, you should work out your costs per mile on your car. If 28p covers your costs, all is OK (and that's a tricky calculation... fuel / servicing / depreciation / marginal extra cost of depreciation for being high mileage). If it doesn't then you are subsidizing your employer's business at your expense and if your employer is charging your travel costs at > 28p a mile to the customer, they are profiting from wearing out your car. I have been in that position and I got rid of my car... traveled to work by train and made them hire cars if they wanted me to travel for work. That lasted for a few months before they decided I could have a company car ;-)

Oh, don't forget in calculating the marginal cost of the car that to use it for work purposes you must have appropriate insurance. That is insurance that covers use for business, not just commuting to your usual place of work. That's often called 'class 1 business' and if you don't have it you should get it as otherwise you are not covered for driving to customer sites