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Where Taxpayers and Advisers Meet

Car Allowance and Business Milage

Joined:Wed Aug 06, 2008 4:08 pm

Postby Deedle » Thu May 01, 2008 9:44 am

Hi there, I hope that someone can help

Could some tell me how to work out the tax on a car allowance of £4000?
This would be based on me working part time - 21 hours a week
I will not be getting a fuel card however, I can claim 33p for business milage

I desperately need to know how much extra this would be per month.

Andre L
Joined:Wed Aug 06, 2008 3:51 pm

Postby Andre L » Thu May 01, 2008 10:11 am

Hi Deedle,

How can you receive a car allowance and claim business milage at the same time?

Assuming you are being paid 33p per business mile you can claim the difference 7p per mile from HMRC. If you are a higher rate taxpayer you can do this by claiming it on your tax return. Otherwise you can can send a detail mileage and calculation to your tax office.

However, if the company pays you a car allowance, you can ask for it to be paid through your PAYE and tax will be deducted and you have nothing else to do.

Hope this helps



Joined:Wed Aug 06, 2008 3:40 pm

Postby al_eebee » Thu May 01, 2008 11:31 am

Presumably you are offered an allowance to buy a car instead of having a company car.

That being so the allowance should be included as part of your salary and taxed accordingly. Presumably it will be paid monthly? If so, and you are not liable at the higher rate you will lose £67/month in tax (£800 pa).

You are to be reimbursed for fuel @ 33p/mile and will be able to claim tax relief on an additional 7p/mile for the first 10,000 business miles.

If you claim for more than 10,000 business miles your employer will either need to reduce the reimbursed amount to 25p/mile or tax you on the excess of 8p/mile

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