New Employer & Tax Question

t1000

Hi All

Anyone know anything about tax in particular to do with car allowances. I was Tuped over to a new company at the start of December and my terms should of transferred however today I came to book in my business miles and was left a little stumped to say the least. I will try my best to explain. I get £375 car allowance per month and then at my old company 20p per business mile. Now I know I pay tax and NIC on the £375 as it is basically extra salary and then the business miles at 20p are tax free. The new company have told me that there policy is to pay 13p per mile and that I would be better off being paid that (rather than the 20p) as then I will get NIC relief on the £375 taxed amount. Now it is my understanding that there should be no difference in the tax/NIC I pay on the £375 regardless of the amount Im paid per mile. If anyone can advise that would be great.

Hope that makes sense 

Rich

Nitefly

From the HMRC website https://www.gov.uk/government/publications/advisory-fuel-rates/current-rates

Not sure about the NIC relief, but my last employer insisted on playing by the rules and adjusted the mileage rates as soon as HMRC changed them.  In effect, by paying you 20p per mile your former employer was giving you a benefit in kind, which you should have paid tax on...

Axe_meister

Actually you can claim the difference between 20p a mile and the hmrc guideline of 45p a mile.
20p a mile should be tax free.
You are allowed tbe paid up to 45p a mile for the first 10000 miles and 25p thereafter before paying tax on the milage allowance.
The £375 will be deemed salary regardless. You only pay benefit in kind if you have a company car.

spark240

I have a Freelander and get 17p per mile, our accountant says that's the current rate?

slowly came down from 25p per mile...

Axe_meister

http://ah-ltd.co.uk/tax-rate-information/mileage.html

Axe_meister

https://www.gov.uk/rates-and-thresholds-for-employers-2014-to-2015#company-cars-advisory-fuel-rates

Nitefly

Axe_meister said:

Actually you can claim the difference between 20p a mile and the hmrc guideline of 45p a mile.
20p a mile should be tax free.
You are allowed tbe paid up to 45p a mile for the first 10000 miles and 25p thereafter before paying tax on the milage allowance.
The £375 will be deemed salary regardless. You only pay benefit in kind if you have a company car.

Ah yes, my bad - I had a company car.

chillidoggy

And if you use a pushbike, you are entitled to 5p a mile.