Morning all

I’m about to get a company car as part of a new role at work, and am getting conflicting advice regarding tax rebates.

The company pays the government’s advisory amount of 11p/miles (2lt diesel) for business miles. I have been told that I can then claim the tax back (40%) on the difference between this and the 45p/mile amount (up to 10k miles, 25p/mile after that).

Is this correct?

Sorry if I have explained it badly.

I’ll be doing 20k+ business miles a year, so this make a big difference. Thanks

The company pays the government’s advisory amount of 11p/miles (2lt diesel)

Not sure thats right btw, I get 20p.

But yes, you can claim the tax back – you do need to provide records and – potentially evidence – if asked by HMRC of your mileage.

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Hope that helps.

Thanks for your reply. 11p is correct according to the following:

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016

(ignore the out of date web address text, its the rates from 1st Dec 2017)

Also, isn’t the website you have linked only relevant when you use your own vehicle? This will be a company car.

P87 used to be the HMRC form to claim tax relief on expenses, if I remember correctly.

45p rate is meant to cover wear and tear on your own car, so as this will be a company car you can’t claim any tax back on the difference.

Well that’ll teach me not to read the op properly, apologies.

45p is on your own car, and it also drops to 20p? I think on mileage over 10k per annum.

So it sounds like I have been misled then. Bugger.

If you take the company car allowance and buy/lease your own car then you can claim the tax back on the difference between the 45p rate and your mileage rate. If you have a company owned/leased vehicle then you cannot.

Given current fuel prices – doesn’t 11p per mile mean you’ll need to average 50mpg to cover costs ?

Is that achievable for the driving you’d be doing ?

If u have a car allowance then you can claim the 45p. If company car then the gov gives guidelines based (terribly) on engine size. Its not the fairest system (my old lexus hybrid had a 2.5l engine so got 25p per mile but got 45mpg so it was very profitable)

45p rate is meant to cover wear and tear on your own car, so as this will be a company car you can’t claim any tax back on the difference.

Yep.

However, some schemes (e.g. Wife’s company car scheme) work such that she owns the car and they just loan her the money to buy it. So she only pays tax on the loan interest and can claim back 45p/mile less company fuel card. She actually makes a net gain running the car….

If I took an allowance I would still be paid the 11p per mile, as the wear/tear etc is covered by the allowance surely?

If this was the case, would I then be able to claim the tax back on the difference?

If so, that might mean taking the allowance makes more sense over taking the company car (I haven’t ordered it yet).

I get a car allowance and get the whopping 11ppm. When I complete my end of year tax return I claim the tax back on the difference between 11 and 45 ppm for business mileage.

I keep a copy of my expenses sheets, which I claim mileage on, if HRMC ever ask for it.

sarkmeister – Member
If I took an allowance I would still be paid the 11p per mile, as the wear/tear etc is covered by the allowance surely?

If this was the case, would I then be able to claim the tax back on the difference?

If so, that might mean taking the allowance makes more sense over taking the company car (I haven’t ordered it yet).

That’s correct. That is how my company (one of the big global IT consultancies) does it.

If I opt for co-car, it’s fully maintain and insured by the company. I pay BIK, I get the company car advisory file rate.

If I take the allowance, and run my own car, I get the advisory fuel rate as the allowance there to buy, maintain, and insure the car. However, I can claim the tax rebate because the allowance is taxed at my marginal rate.

If you’re a member of staff who doesn’t get an allowance or option of co-car, then you can claim the full 45/20p rate for using your own car for company business. No rebate is available here either.

It was more cost effective for me to take the allowance, as anything vaguely interesting meant I got shafted on BIK.

I keep a spreadsheet where I track all my company mileage for each tax year, how much I claimed and was paid for it, it it does some sums to give me the rebate. I supply this info to HMRC using the online service https://www.tax.service.gov.uk/forms/form/tax-relief-for-expenses-of-employment/new

Sounds like you are in a similar position to me then (I work for a very large engineering company).

I think I’ll spend the weekend working out whether the allowance will be cheaper then. I’d need to get a new car, as I don’t think my 11 yr old focus would handle the miles (and it isn’t actually allowed under the company rules anyway).

Top tip, when you do the sums, don’t automatically assume a diesel car is the most cost effective.

I run a 3l petrol, even for 20k a year. It pays at 21ppm currently, yet it costs 17ppm in fuel on the usual company trips.

The same car with the 3l diesel pays 13ppm, yet costs 15ppm. So I’d have lost money on it. Obviously this is an extreme example, but my previous Merc C220d company car cost 13ppm and reimbursed at 13ppm only if I was careful driving. And got hammered on BIK too.

my understanding is that the company provides you with a car, you can claim mileage at 11 pence, although you’ll also be paying extra tax (benefit in kind) if you get to keep the car all the time. The rules are different if it’s a pool car that you just use to go to appts and so on.

If you use your own car: up to 10,000 miles you can claim 45pence a mile and after that 25pence

Interesting thread. I’ve taken a company car allowance (rather than a company car) for the last few years but claimed the 11/12p mileage (for a 2l diesel). I had no idea I could claim tax relief on the difference between the 11/ 12p and 45p per mile.

Gotta do my tax return this week…

Edit:

Making the most of tax-free mileage allowances

5000 business miles in 16/17 at 12ppm is worth around £650!