Company car versus extra salary - confused?

[fuzzer]

If you are standing the cost of your motoring then you can be paid upto 40p tax free.
If you are paid a seperate cash alternative you are taxed on the whole value of that but you make the recovery against your actual mileage.
If you cover enough miles you will recover all the tax paid on the allowance.

Does that answer your query?

yes thanks dude :bannana:

 

[Dieselman]

Hi Simon,
Things might well have changed so please consider this as a question.

I used to claim mileage travelling from my home to the office because I had to carry 'equipment' from home to the office. This equipment was owned by my employer but was required to be with me 24 hours a day.

I wonder if this ruling still applies and how it can be interpreted?

Regards,
John

If your regular place of work is a fixed location it is classed as commuting so is private mileage. What you carry in the car is of no interest to the IR.

 

[glojo]

If your regular place of work is a fixed location it is classed as commuting so is private mileage. What you carry in the car is of no interest to the IR.

As I stated in my post things might have changed but I assure you that in the 1970's and early 80's you could definitely claim. All we had to do was justify the reasons for taking the equipment from a fixed location (our home address) to our place of employment (office) and return.

John

 

[Rory]

am i not right in saying that the 40p per mile plus 15p per passenger per mile is only if you use your own car.

If you opt out and take company car allowance i thought the rate dropped quite a bit. 17p sounds about right for an opt out claim on mileage.

You're saying the same thing twice!

40p is correct in terms of the max amount you can be paid for using your own car for business without incurring any tax liability. It drops to 25p after 10000miles.
Employers can (and typically do) pay less, so you get the tax back up to 40p. They could pay more, but you'd pay extra tax then.

The max passenger rate is 5p (per passenger. If you get less (or none) you can't claim this back on tax.


The rules are different for company owned cars, but basically you're just supossed to get petrol money (or you incur a tax liability).

 

[Rory]

As I stated in my post things might have changed but I assure you that in the 1970's and early 80's you could definitely claim. All we had to do was justify the reasons for taking the equipment from a fixed location (our home address) to our place of employment (office) and return.

John

I'm not aware of any suggestion in the current rules that you can do this. Not sure of the current state of play with vans, but I think it used to be assumed that all journeys in vans were business related.

When you say 'claim' - do you mean claim tax relief, or claim on your expenses from an employer? What was your status then - most employees with cars for business use in the 70's/80's would be company cars, so the issue probably wouldn't arise in that case.

 

[N111AOW]

Some things to watch out for:

You need to take into account what your employer will pay you for use of your own car for business mileage. My employer pays 15p per business mile both to employees who have a company car and to those who have opted out of the company car scheme - the more business miles I do, the less worthwhile it is opting out of the scheme

The more private miles you do, the less worthwhile it is opting out of the scheme (I do around 25k miles altogether per annum and the cash alternative of £6k would not get near enabling me to have a similar car privately to the £30k car I can have as a company car - that's so bad in fact that virtually everyone at work goes for the company car)

Watch out for restrictions on what car you can buy when opting out of the company car - some companies will insist on having a say - eg, nothing more than 5 years old, it must be a "prestige" brand etc - these can make opting out much more expensive

Watch out for the tax on the company car - something with low CO2 emissions will be taxed much less than something with high CO2 emissions - this can cost a hundred or two a month if you get it really wrong!

Someone did say there is a convenience factor, and valued it at £100 per month. Not sure it's worth that much myself - but my wife disagrees! She thinks it's worth more than that. Plus, when I have a company car, I have no choice but to stick with it for three years - if I;m buying privately there's a grave danger I'll waste thousands on changing too often. I have a low boredom threshhold...

 

[Alfie]

I know for a fact that you cannot claim mileage or business use of your car beit personal car or company car when the journey is from your normal place of work to/from your normal place of residence. If you travel from home to another place (eg client visit) you can claim the difference between the mileage to work and the client premises.

My (present )employer pays 40p per mile which is the limit before tax pops into the equation.

Those in the motor trade seem to get the best of both worlds. Nearly new demonstrator to use but these are all 'pool' cars so they dont have to pay any tax on private usage Plus the car is maintained, fuelled and pretty much totally expensed.

Vans, I think are taxed at a flat rate of something like £500 per year if your employer allows you take the van home of an evening/after woork.

 

[DieselE]

I know for a fact that you cannot claim mileage or business use of your car beit personal car or company car when the journey is from your normal place of work to/from your normal place of residence. If you travel from home to another place (eg client visit) you can claim the difference between the mileage to work and the client premises.

IIRC it's actually the distance from your place of work to the client's premises or from home to the client's premises whichever is the shorter distance.

 

[Rory]

IIRC it's actually the distance from your place of work to the client's premises or from home to the client's premises whichever is the shorter distance.

No - it's the difference. Most of my wife's calls are nearer home than the office, so she doesn't get any business miles (she works for the Government). The only benefit is that she does save on time and parking, and she gets flexitime from the moment she leaves home when she's going straight to a call.

 

[219]

Another option is to keep your own car and use that to travel to work .

Your company can then provide a vehicle for business use only . The company vehicle would stay at the office and never be taken home or used privately , therefore you would pay no taxes for it , just like a van driver who goes to work in his own car , drives the company van for work , then goes home at night in his own car .

Or are the company going to buy you a new car after you've run yours into the ground for their benefit ? I don't think so .

Oh , and are you going to be expected to carry goods or equipment around in it , wearing out the back seats , suspension etc ?

Where are you left if you have an accident driving on company business ? Far better that it happens to 'their' car and yours is waiting for you to go home in .

 

[Alps]

I started a similar thread not so long ago, but as I had no option but a cash allowance, it was an easy decision.

 

[glojo]

If your regular place of work is a fixed location it is classed as commuting so is private mileage. What you carry in the car is of no interest to the IR.

Just got off the telephone. I have spoken with the senior officer at my old Pay Office. It is still ongoing, although they cannot quote me any relevant form. The procedure is exactly the same as it was twenty years ago. Each individual that is entitled to claim has to contact their local Inland Revenue Office. This is what I had to do way back in the 1970's.

I contacted my local Inland Revenue Office, they gave me a form to fill in stating the average monthly mileage I would travel from... My home address to my office. It was explained what the equipment was and how it would not be acceptable or indeed practicle to use public transport. The average mileage would be accepted and my tax coding adjusted accordingly, or the form was bounced back querying the mileage

As stated this is still on going within the unit that I served with, and has not changed. It does not apply to anyone that simply works '9 - 5pm' in an office all day. There MUST be a justifible need to use the vehicle to carry your firms equipment that you need in your possession 24hrs a day. Only the individual will know if they can meet that criteria.

I would not of mentioned this if it were not both lawful and true.

John

 

[Satch]

I started a similar thread not so long ago, but as I had no option but a cash allowance, it was an easy decision.

Same here. In fact, when I started surprised at the size of the allowance offered as part of the package given that company cars were never really needed. So why the generous car allowance, I asked?

Easy. Fully taxable income to you mate but non pensionable earnings and not part of base salary for any overtime or bonus calculation purpose. Arrgh!

 

[Rory]

If i were to take a car, I still do not get taxed like a company car driver. I sign up to a personal lease, no deposit, company pays maintenance, insurance etc etc and buys me out if I resign or get sacked!

This should worry your employer:
http://www.fleetnewsnet.co.uk/NEWS/view_article.asp?art_ID=41007&menu=1

 

[N111AOW]

Not quite

No - it's the difference. Most of my wife's calls are nearer home than the office, so she doesn't get any business miles (she works for the Government). The only benefit is that she does save on time and parking, and she gets flexitime from the moment she leaves home when she's going straight to a call.

This isn't quite right any more - changed IIRC about 5 years ago. It's quite complicated so I'm not sure I'm going to get this absolutely right - apologies in advance

For visits direct to client's premises, you have to determine whether or not the journey is principally an ordinary commuting journey - ie, is most of the route what you would normally travel on the way in to your employer's premises. For example, I live in Preston and used to work in Chorley, 17 miles away. If I visited a Client in Blackpool, 15 miles in the opposite direction, I would be able to claim 30 business miles. But if I drove to a client 15 miles past the office in Chorley, I would not be able to claim any! But if the client were 30 miles past Chorley, I would be able to claim 94 business miles (2 x (17 + 30)). Messy, huh? It was also complicated by my employer only allowing me to claim the lesser of the distance from home to the client and office to client. So I had to keep two different business mileage records - one for tax purposes and one for claiming expenses

That means that Rory's wife would be able to claim tax relief on journeys nearer than to the office (relief based on full 40p per mile tax allowance because no expenses paid) provided that she did not spend most of her journey on a route that she would normally take to work

 

[N111AOW]

Same here. In fact, when I started surprised at the size of the allowance offered as part of the package given that company cars were never really needed. So why the generous car allowance, I asked?

Easy. Fully taxable income to you mate but non pensionable earnings and not part of base salary for any overtime or bonus calculation purpose. Arrgh!

Not part of salary for pay rise purposes either - car allowance tends to get reviewed less often, if at all (previous employer has had same allowance for around 9 years now... and current employer looking at reviewing significantly upwards so there is actually some incentive for people to opt out)

 

[Rory]

For visits direct to client's premises, you have to determine whether or not the journey is principally an ordinary commuting journey - ie, is most of the route what you would normally travel on the way in to your employer's premises. For example, I live in Preston and used to work in Chorley, 17 miles away. If I visited a Client in Blackpool, 15 miles in the opposite direction, I would be able to claim 30 business miles. But if I drove to a client 15 miles past the office in Chorley, I would not be able to claim any! But if the client were 30 miles past Chorley, I would be able to claim 94 business miles (2 x (17 + 30)). Messy, huh? It was also complicated by my employer only allowing me to claim the lesser of the distance from home to the client and office to client. So I had to keep two different business mileage records - one for tax purposes and one for claiming expenses

That means that Rory's wife would be able to claim tax relief on journeys nearer than to the office (relief based on full 40p per mile tax allowance because no expenses paid) provided that she did not spend most of her journey on a route that she would normally take to work

Yes, you're right (mostly!). I was confusing her employers scheme, which user the 'lesser' calculation, and the Tax situation.
Where I believe you're wrong is that if you travel from home directly to a client, then the whole journey is claimable from a tax point of view. The IR rules are pretty clear about this, and there's absolutely no comment about it being on a similar route. If you actually called in to the office, then you could only claim for office to client.

 

[Rory]

Where I believe you're wrong is that if you travel from home directly to a client, then the whole journey is claimable from a tax point of view. The IR rules are pretty clear about this, and there's absolutely no comment about it being on a similar route. If you actually called in to the office, then you could only claim for office to client.

I looked at this again last night, and actually, you could even call in at the office and the whole journey from home to client would still be allowable.
From http://www.hmrc.gov.uk/helpsheets/490.pdf
"Example
Ike drives each day between his home in Southampton and his office in Winchester.
One day he has to travel on business to Birmingham and back. He drives directly from home to Birmingham but stops off at his office to pick up some papers.
His stop is incidental to his business journey. His business journey is from his home in Southampton to Birmingham and back. Relief is available for the cost of his journey from his home to Birmingham and back."