I didn't want to hijack the petrol prices thread with this question:

Why is 40p per mile the maximum I can claim for business mileage in my own car?

I've been told its for tax reasons and this is the maximum possible without you getting taxed for the gain. Anyone know if this is true?

If it is, when I started work properly 3 years ago, petrol was 75p/litre, my servicing was £38 per hour and generally everything was cheaper I was claiming 40p per mile from work. 3 years later I can still only claim 40p per mile and petrol is 95p, servicing costs me £50 per hour and everything else costs more.

Is this more insiduous Gordon Brown fiscal drag or just tough ****?

I guess its tough - I always feel quite happy to get 40p a mile for mine, as it only costs 10p a mile in fuel, at worst, and the other 30p is a bonus which goes to tyres and stuff.

Always liked claiming £30 for an 80 mile round trip to my old head office, which only cost me about £8 in diesel.

Yes its tax reasons, my limit is also only 40p per mile. If it was any more I believe you will be taxed on it, so end up with less.

Why do i get paid 43ppm?

I run my own business and claim 40p/mile, but you can only do this till you hit 10K miles then you have to claim 25p/mile onwards (this is tax free). If you buy your car through your own company then you can

Why do i get paid 43ppm?

Do you drive a car with a relatively large engine?

Do you drive a car with a relatively large engine?[/color']

Its a pansy little 1.9 8v diesel.

I guess its tough - I always feel quite happy to get 40p a mile for mine, as it only costs 10p a mile in fuel, at worst, and the other 30p is a bonus which goes to tyres and stuff...

I've got no complaints about the 40p amount as such, petrol at about 40mpg is only between 10-11p a mile for me. Its just strange that motoring costs have risen quite a bit in that time yet the allowance per mile is static.

Its a pansy little 1.9 8v diesel.

If you are not being taxed on it then you have done well, although the dreaded IR might look into it one day (they can go back at least 6 years) and charge you tax on all the extra 3ps you made per mile. An interesting perk that many people overlook because they work for someone elses business, is that you can claim the tax back on some of your mileage claims for work. i.e. if your firm pays you say 30p/mile you can claim the tax relief on the other 10p/mile for the first 10K miles/year. This can be back dated (at least you used to be able to) 3 years. So the max this pretend person could claim would be 22% (or what ever the current tax % is) of: 10p x 10,000miles x 3 years. Which I think would mean the IR would owe this person around

We were in a similar situation a little while ago, SWMBO was using her own car for business and recieving an allowance as well as a mileage rate. The allowance is taxable and is payment toward purchasing the car.

She was told that they would pay the government rates of 40p for the first 10k and 25p thereafter as stated above but what the crafty buggers did was to pay the mileage rate as a negative figure first before adding it back on giving a net effect of zero in the pay packet. The Inland Revenue then gave her tax relief at 22% of that 40p/25p - we were only just breaking even at 8.8p/5.5p hence the reason we sold the car.

IANAA.

If you keep records of how much your car costs, including

Insurance

Parts

I used to run my own car and get 40p/mile

Then i got a car allowance and changed my car to one through the company.

The allowance covers the car lease, tax and maintenance although I contribute £7/month. The company picks up the tab for the VAT on the lease and the insurance too. My mileage allowance is down to 12p/mile but that covers the cost of fuel (just about) so i'm happy.

Obviously I pay income tax on the car but it's Euro IV compliant so i've minimised the blow.

IANAA.

If you keep records of how much your car costs, including

Insurance

Parts

My accountants intimated that it is more beneficial to claim the

It's correct that 40p/mile is the maximum you can claim for expenses in running your own car for work, for the first 10,000 miles per annum, and then 25p/mile thereafter. Otherwise your "expenses" would become a taxable benefit.

I remember taking a summer job with Highland Council back in 1993 and the mileage rate was 70p/mile with and extra 11p/mile for taking a passenger. Happy days !

What Car magazine lists the running costs including insurance, petrol, depreciation etc of just about every car sold in the UK. Here are a few examples -

Audi TT (225) Quattro 60.8p/mile

Ford Focus Mk2 1.6 Zetec 3dr 36.1p/mile

Mini 1.6 Cooper 33.1p/mile

Nissan Micra 1.0 E 24.3p/mile

Peugeot 407 Saloon 2.0i SE 49.1p/mile

Skoda Fabia vRS 34.1p/mile

Skoda Octavia Mk2 1.9 TDI Ambiente 34.6p/mile

So whether you think 40p/mile is a fair rate depends largely on what you drive. But you're not likely to be happy with 25p/mile unless you've got a really cheap car !

Personally I have opted out of our company car scheme and instead get paid a car allowance which varies according to position and annual business mileage.

VRStu if I understand your post correctly SWMBO's employer has acted correctly. I think maybe you have misunderstood how it's supposed to work in cases where car allowance is paid.

My car allowance is partially taxed and partially tax free. They take my annual business mileage and apply the 40p/mile rate to the first 10,000 miles and then 25p/mile to the remainder. This determines how much of my allowance is tax free. I am taxed on my car allowance over and above that. However I also get a fuel card which complicates matters somewhat, but that's a different story, and I basically pay tax on the value of all fuel purchased.

VRStu if I understand your post correctly SWMBO's employer has acted correctly. I think maybe you have misunderstood how it's supposed to work in cases where car allowance is paid.

We went to the local tax office for an interview to find out the correct situation. The Tax Officer was a little bemused at first when he saw what they were doing but concluded that yes it was correct however a little naughty. This tax year the company were told by the IR to revise the way payments are made. Doesn't matter now anyway as she's changed jobs and gone back into a fully financed company car.

We went to the local tax office for an interview to find out the correct situation. The Tax Officer was a little bemused at first when he saw what they were doing but concluded that yes it was correct however a little naughty. This tax year the company were told by the IR to revise the way payments are made. Doesn't matter now anyway as she's changed jobs and gone back into a fully financed company car.

Sorry mate I have just re-read your original post and I'm not 100% clear on the situation. But I think the problem was with how her employers were doing their accounting rather than a deliberate attempt to rip off their employees.

It was undoubtedly an accounting issue but the net effect to the employee was only 22% of the percieved mileage rate, paid as a tax allowance rather than in cash.

OK I am self employed and run my own car. I used to be lazy and claim the IR tax allowances for my business mieage when they were higher for larger cars, but when they brought in the all in one rate of 40p I stopped and used the detailed way. It really is not much to do it if you have a computer accounts package - I use Quicken

I keep records of what car actually costs me in year - everything including insurance, AA, tax, fuel, servicing etc. I have to deduct the VAT because I am VAT registered but if you are not you don't. Then keep a record of business mileage and total mileage and pro rata costs at the end of the year. You can also claim capital allowance - 25% of cars value up to a maximum of

Hi

If you are self employed and do a lot of miles, it can be beneficial to claim the 40/25 scheme instead of all expenses and 25% capital depreciation. I expect to cover up to 50,000 business miles a year. This allows me to claim

Hi

If you are self employed and do a lot of miles, it can be beneficial to claim the 40/25 scheme instead of all expenses and 25% capital depreciation. I expect to cover up to 50,000 business miles a year. This allows me to claim

I claim 52.7p a mile for the first 8000 a year.

Might be worth me swapping to mileage when I come to change my car.

I'm self employed and do about 50k business miles per year. Just not sure if it is right for me as at the present the company pays everything for the car. Hmmm, need to look in to it.....