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Post by Tim on May 4, 2017 11:25:10 GMT
Not for me, sadly.
At work we've got a mixed scheme for fee earners - some have cars provided and others get an allowance.
If we were to offer allowance only what rate should we be paying mileage claims at? I had assumed 45p/mile but HR has suggested it should be at 11p/mile .
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Post by Martin on May 4, 2017 11:36:47 GMT
People with a car allowance usually get paid the same mileage rate as those with a company car, based in the latest HMRC rate. I think it's 14p for me at the moment.
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Post by chipbutty on May 4, 2017 12:07:01 GMT
On the basis that the allowance reflects a contribution to the cost of obtaining and maintaining a vehicle for the purposes of usage in the course of daily business. Then the mileage rate should only need to cover the cost of fuel (not incremental wear and tear on the vehicle).
In that case, the simple question is : At current fuel prices and reasonable average fuel economy, does 11 pence per mile allow the cost of fuel to be covered ?.
Caveat - I guess you assume the individual will claim the tax difference as well.
I think 11 pence per mile works out at 50 mpg if you pay £1.20 a litre.
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Post by ChrisM on May 4, 2017 12:13:24 GMT
Where I worked back in the 1990's, the company cars were leased and they were effectively reserved as management perks. If you were travelling around a lot on business, you needed to be able to confirm that you would be doing in excess of 10k miles per year for 3 years (since the leases were for 36 months).
You then had to pay 2/7 the lease costs yourself (on the basis that you had use of the car for 2 days out of every 7, the week-ends).
We used to have an alternative "essential car user" allowance that you could claim instead, based on a rolling 12-month basis (and paid with salary monthly), plus pence-per-mile. That was done away with and the company went over to a higher-mileage rate for those who previously had the essential user payments. When I left, that rate was 44p per mile (back in 1995) and I've not yet seen anyone paying such a generous rate, which did actually allow me to take a loan out to buy a car for business use. IMHO the current HMRC rates for mileage are effectively punitive and do not make sense; it may be cheaper to hire a car for longer, short-duration trips than to use your own, taking into account extra servicing, depreciation etc etc
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Post by Bob Sacamano v2.0 on May 4, 2017 12:39:16 GMT
Ah remember the happy days when you phoned the inland revenue and told them you were doing over 18k business miles a year and your, already small, company car tax bill was halved? Or free fuel on All Star cards? I remember one colleague who was moonlighting as a minicab driver and the Company was paying all his bills.
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Post by Tim on May 4, 2017 13:14:24 GMT
This is one of those issues that is likely to cause a big fuss among the car 'qualifiers' and those who don't quite fit.
There are 2 similar sides to our business, one lot currently get a car (or an allowance for the 2 newest recruits), the 2nd lot don't.
They're all client facing but traditionally the 2nd group work mostly from the office and only see clients very occasionally.
On the other hand, because all the expense claims come across my desk, I can see that the people who do have cars don't actually do a huge mileage. They're all currently on the 11p rate and very rarely get above £50 per month.
Add in the fact that they're all well paid and the clear potential for tears (the head of FP had his bottom lip sticking out when I said allowance + 11p/mile) may lead me to want to wind their necks in. Not that I have that particular role.
The timing is clearly bad because I'm also currently calculating bonuses and they're impatiently wondering when they'll find out how much. Not very tactful when the person they're asking is just on a salary........
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Post by Bob Sacamano v2.0 on May 4, 2017 13:32:31 GMT
Ah remember the happy days when you phoned the inland revenue and told them you were doing over 18k business miles a year and your, already small, company car tax bill was halved? At my dads old place the management team and MD used to get cars as complete perks, they rarely used them for work - they soon realised they could drop their car tax bill rapidly by swapping with the service engineers in Feb/March to get them over 2500 miles - this also had the benefit to the service engineers that instead of the fleet of Astra 1.6D L Estates they had been forced into to do 30kpa, the management team changed them all over to Peugeot 405GRDT estates! The only stipulation for the management team was they needed to buy an estate car so the boot could be filled with tools. Current HMRC rates are perfectly adequate for the job in hand. When 'er indoors worked in the motor trade all the dealer principles got 2 cars - one for themselves and one for their wife (or significant life partner if they were down south). |
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Post by racingteatray on May 4, 2017 13:58:30 GMT
Hope this helps:  |
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Post by johnc on May 4, 2017 14:10:12 GMT
As with most tax questions, the answer is "it depends"
This link will take you to HMRC's page for fuel rates:
www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016
These rates are for people who are supplied with a car but have to pay for all the fuel and then reclaim the cost of fuel for business use. These rates are also used by tight arse employers.
Whether these rates are reasonable for those on a car allowance depends on how much the car allowance is. I have seen some employers who have withdrawn company cars and have increased salaries by a modest amount, say £250 a month. However they have also introduced the 45p/25p mileage allowance which for the higher mileage drivers was profitable overall.
In your case with only small business mileages, the cars are basically a perk, so to prevent noses being too far out of joint the car allowances are likely to need to be higher and the mileage paid at the lower end. There is no absolute right answer. |
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Post by Boxer6 on May 4, 2017 14:28:47 GMT
For our lease car drivers, the current mileage rate is 12p/mile. For me as a private car user it's 56p/mile; we were all told this was to take into account wear & tear in addition to petrol etc. This is in contrast to when I first started as a orivte car user, when it was a flat 14p/mile. Then there was a (long overdue) shake up and we got 63ppm AND a lump sum payment of £63/month - for wear & tear! That lasted less than 2 years before they realised how much it was costing them!! As I'm in the fairly fortunate position of owning my car outright (as I have done since day 1) 56ppm pretty much covers my business mileage plus a bit over for tyres etc.
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Post by Bob Sacamano v2.0 on May 4, 2017 14:53:30 GMT
One of the issues employers are now having to get to grips with is if you are paying an employee to use his car on Company business how do you ensure it is properly insured and roadworthy? If the employee is involved in an accident while using his car for Company business what are your potential liabilities if the cause of the crash is due to an improperly maintained vehicle or the insurance cover isn't correct? Bit of a legal minefield. We've stopped paying mileage and all Company business travel is carried out in hire cars.
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Post by grampa on May 4, 2017 15:19:42 GMT
In the far off days when I had a company car the only expense I had on it was the personal tax - everything else including personal petrol and even cleaning materials was on the company - all seems much more complicated now. On the rare occasion an employee with no car had to go somewhere on company business they either took a company vehicle or if one was't available we hired a car for them.
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Post by Tim on May 4, 2017 15:19:56 GMT
As with most tax questions, the answer is "it depends"
This link will take you to HMRC's page for fuel rates:
www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016
These rates are for people who are supplied with a car but have to pay for all the fuel and then reclaim the cost of fuel for business use. These rates are also used by tight arse employers.
Whether these rates are reasonable for those on a car allowance depends on how much the car allowance is. I have seen some employers who have withdrawn company cars and have increased salaries by a modest amount, say £250 a month. However they have also introduced the 45p/25p mileage allowance which for the higher mileage drivers was profitable overall.
In your case with only small business mileages, the cars are basically a perk, so to prevent noses being too far out of joint the car allowances are likely to need to be higher and the mileage paid at the lower end. There is no absolute right answer. We're currently giving an allowance of £300/month. For those with a car leased through the company they're required to pay the excess above that. We recognise that's stingy and it's where this has come from. In addition we pay the 11p/mile rate as all the cars are 2 litre diesel.
The person who was unhappy at the prospect of having to buy his car and still only get that mileage rate has perked up now with the knowledge he can claim the shortfall back through his tax return. Just as well really, I'm struggling to have any sympathy.
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Post by racingteatray on May 4, 2017 15:20:02 GMT
Surely you need to be reimbursed for fuel even if using a hire car?
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Post by johnc on May 4, 2017 15:25:29 GMT
For our lease car drivers, the current mileage rate is 12p/mile. For me as a private car user it's 56p/mile; we were all told this was to take into account wear & tear in addition to petrol etc. This is in contrast to when I first started as a orivte car user, when it was a flat 14p/mile. Then there was a (long overdue) shake up and we got 63ppm AND a lump sum payment of £63/month - for wear & tear! That lasted less than 2 years before they realised how much it was costing them!! As I'm in the fairly fortunate position of owning my car outright (as I have done since day 1) 56ppm pretty much covers my business mileage plus a bit over for tyres etc. Anything you are paid which is over 45p/mile for the first 10,000 miles and 25p/mile thereafter, is taxable. If it is paid through payroll, it is probably taxed already but if not you might have a tax liability. |
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Post by humphreythepug on May 4, 2017 15:27:53 GMT
I get refunded 14p per mile, if I uses a company vehicle for company travel; a course for example, usually I just bung it in on the fuel card though and don't claim as I don't feel that I should have to pay out and then wait till next pay day to get it back.
Tina uses her own car for her work and gets 45p per mile for business miles.
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Post by johnc on May 4, 2017 15:28:45 GMT
The person who was unhappy at the prospect of having to buy his car and still only get that mileage rate has perked up now with the knowledge he can claim the shortfall back through his tax return. Just as well really, I'm struggling to have any sympathy.
But does he know that what he is claiming back is only the tax at 20% or 40% on the difference between 45p/mile and 11p/mile. He is not claiming 34p/mile from HMRC. I have lost count of the number of times I have seen this and spoken to unhappy people who can't get their head around it. |
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Post by Tim on May 4, 2017 15:31:41 GMT
The person who was unhappy at the prospect of having to buy his car and still only get that mileage rate has perked up now with the knowledge he can claim the shortfall back through his tax return. Just as well really, I'm struggling to have any sympathy.
But does he know that what he is claiming back is only the tax at 20% or 40% on the difference between 45p/mile and 11p/mile. He is not claiming 34p/mile from HMRC. I have lost count of the number of times I have seen this and spoken to unhappy people who can't get their head around it. He's a financial planner so he SHOULD be aware of that. If not, well I've got a box of hankies on my desk that he's welcome to use to dry his eyes 
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Post by Martin on May 4, 2017 16:11:45 GMT
I used to have to claim the difference but my new employer covers that through my salary in a way I haven't tried to understand. All I know is I get more than the 13/14p they actually pay and no longer have to put it on my tax return.
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Post by Boxer6 on May 4, 2017 18:32:37 GMT
Anything you are paid which is over 45p/mile for the first 10,000 miles and 25p/mile thereafter, is taxable. If it is paid through payroll, it is probably taxed already but if not you might have a tax liability. We work for the same employer, our PAYE code is adjusted each year to reflect the mileage paid above HMRC rates so the change is made at source (rather than a hefty tax bill!) Exactly so. Shows up on my wage slip every month - the swines!!  |
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Post by Deleted on May 4, 2017 19:06:25 GMT
Ah remember the happy days when you phoned the inland revenue and told them you were doing over 18k business miles a year and your, already small, company car tax bill was halved? At my dads old place the management team and MD used to get cars as complete perks, they rarely used them for work - they soon realised they could drop their car tax bill rapidly by swapping with the service engineers in Feb/March to get them over 2500 miles - this also had the benefit to the service engineers that instead of the fleet of Astra 1.6D L Estates they had been forced into to do 30kpa, the management team changed them all over to Peugeot 405GRDT estates! The only stipulation for the management team was they needed to buy an estate car so the boot could be filled with tools. Current HMRC rates are perfectly adequate for the job in hand. We used to a car swap around in March, usually with the reps who did big miles who get a better car for a week or so to get us over the 12,000 or 18,000 hurdle. HMRC fuel rates are the ones to go for, however I see your point about mileages. When I worked for Argos (HRG as Martin did) the allowance at my grade was £300/month and something like 20p per mile, or you could have something like a Volvo S60 D5 which was far better than you could lease for that money if you did limited mileage. Therefore all the head office staff had company cars that sat in the Car Park. On the other hand the field staff who did serious mileage were quids in with the mileage rate so they all took the allowance so effectively the car scheme was the reverse of what it should be. I took a company car. My next employer gave me £600/month or a 525d SE so the cash was far better as I could run what I like and make a profit. Now I just pay myself 45p mile for company business mileage. |
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Post by ChrisM on May 4, 2017 20:29:17 GMT
At one place where I worked, we were part of a Group and in one of the other companies, their chief accountant had a company car but he hardly did any miles in it. So he use to lend it out to staff who needed a car for business trips. He apparently broke the 18k miles limit one year, halving his car tax bill despite hardly using the car himself in that 12 month period !
My dad had a company car for about the past 20 years of his working life, and one year he got so genuinely close to the 18k mark that when he had to attend a course in Edinburgh, he drove there rather than flew to break the 18k mark.
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Post by johnc on May 5, 2017 6:43:15 GMT
At one place where I worked, we were part of a Group and in one of the other companies, their chief accountant had a company car but he hardly did any miles in it. So he use to lend it out to staff who needed a car for business trips. He apparently broke the 18k miles limit one year, halving his car tax bill despite hardly using the car himself in that 12 month period ! Strictly illegal but that was back in the days when you could negotiate, HMRC was staffed with humans and they didn't all have a target to apply penalties to any error.(said slightly tongue in cheek because there are still decent people in HMRC but the penalty regime stinks - some deserve a penalty but many don't - they have made the tax system so complicated that even HMRC struggle to understand it and yet Mr General Public is supposed to understand every subtle nuance and get it right every time or get a financial jackboot straight up his arse) |
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Post by PG on May 7, 2017 20:27:02 GMT
If people give up a car and get an allowance of £300 per month, what sort of car were they getting before? Because that sounds a really stingy allowance! And the allowance is taxable. So it is for the employer to decide what rate to reimburse at, based on what they were trying to achieve.
If the £300 per month allowance was designed to replace and compensate for the loss of the private use of a company car and not the full lease cost, then they really ought to get the higher FPCS rates as they are effectively using their own car for company business.
If the allowance was designed to replace the full cost of the lease car the employee gives up, then it ought to be the lower fuel only rate (same as for a company car driver).
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Post by Tim on May 8, 2017 11:08:36 GMT
The current £300 is what they're allowed to spend up to.
If they want something better they have to make up the difference as a salary deduction.
We inherited the £300 when we TUPE'd across from our former employer, nobody has changed their car yet and this is the first of us looking at it.
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Post by PG on May 8, 2017 15:44:11 GMT
The current £300 is what they're allowed to spend up to. If they want something better they have to make up the difference as a salary deduction. We inherited the £300 when we TUPE'd across from our former employer, nobody has changed their car yet and this is the first of us looking at it. Looks like it should be the fuel only rates then (as posted by racing higher up) - FPCS Fuel only rates |
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Post by Tim on May 9, 2017 8:47:25 GMT
Those are the rates that get paid to the people who have company cars and we're now going to pay that to those who take the allowance.
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