40p per miles – Petrol Expenses
- September 10, 2007 at 1:27 am #9908
Hi All, I wondered how the government stipulated 40p per mile expenses worked. The employee makes a journey paying these expenses up front, and the claims it back from the employer. We all know that 40per is rarther generous and employees easily make a drink on top of their expenses. But does this money come out of the employers pocket? Or does the government pay for it? Or Does the employer pay it and then claim it back or claim tax rebate from it? Anyone know how it works? ThanksSeptember 10, 2007 at 11:22 am #51946
Hi there Aaron John
I am an accountant (ACCA) and will try and explain the scheme to you –
The government’s tax emept current Approved Mileage Allowance Payment (AMAP’s) is a scheme whereby employees can claim in their expenses up to 40p for the first 10,000 miles and 25p per mile thereafter, in any one tax year.
This mileage allowance is claimed for by the employee and is paid for by the employer through expense claim form. These expenses are tax deductible from business profits when calculating the amount of tax to be paid by the company. These expenses for the Employee are free from the deduction of tax and national insurance.
Unforunately, the 40 pence is not such a generous rate when it is to compensate the employee for not just petrol, but wear and tear on the vehicle (how many miles can you get from expensive tyres alone) road fund licence (has just gone up for 4×4)and insurance (additional prems for business use), and this rate hasn’t been altered for many years now.
You may need to know that the "business miles" does not include trips from home to your regular place of work.
There are special rules to be in the scheme, administration and possible consequences. There could alternatives that could be better depending on your circumstances. Please contact me if you require further advice or assistance. Regards, Jayne
[I trade under Delphinium services and provide a full range of services for small companies which include Book-keeping, Business Plans, consulting, cashflow, Vat, Limited Companies registration and secretarial services and Inland Revenue year end tax returns ]
October 16, 2007 at 4:24 pm #52107
I am a trainee quantity surveyor and i am currently on £10,000 per year + 25% bonus. I recieve only 20p per mile for the use of my own car and i dont think this is acceptable.So far since april i have done 4000miles+ and 20ppm barely covers the cost of petrol that i use let alone maintenance, insurance, tax, depreciation etc. Should my employer be paying me more or are they legally allowed to pay me this pitence? I am currently spending around a 3rd of my wage on running my car per year. Any help would be much appreciated. ThanksOctober 17, 2007 at 10:41 am #52113
The £0.40/mile (£0.25/mile for business travel >10,000 miles) is allowable for tax purposes. The post above is incorrect – you don’t have to claim the 40p rate from your employer. If you get reimbursed say 20p per mile you can get the rest as an allowance against your tax bill. There aren’t any ‘special rules’ to be in the scheme – it’s allowable to all employees. Additionally and as a concession, self-employed people can claim for business travel at that rate, as opposed to claiming a portion of their vehicle capital allowances and running costs.
Mike Tombs TaxAssist Accountants www.taxassist.co.uk/dudleyNovember 7, 2008 at 8:04 pm #55521
Could you tell me if as a company director of Ltd Company as well as an employee of the business that I would be able to claim AMAP?
Or do I claim it as expenses ???
Need really to assess what is possible to claim for as I have just started in business
ThanksNovember 9, 2008 at 6:14 pm #55528
Payments under AMAP are available to company directors in the same way as employees. It makes no difference.
www.brighton-accountants.comApril 15, 2010 at 3:34 pm #63552
I am currently self employed and drive to a client 3 days a week in Sheffield,
This equates to 1290 miles in one month and I have claimed nothing can I claim the 40p a mile and should I invoice the amount to the client.?
Thanks in advanceAugust 7, 2010 at 7:44 pm #65516
I work for Domino’s pizza, as a delivery driver and when i do a delivery i make 85p a delivery on week days and £1 on weekends they count this as millage. But for these deliverys i can go as far s 10miles out and this doesn’t really cover the petrol nevermind the costs of wear and tear. I was wondering if i am eledgable for this 40p a mile as it is much better than 1pound for 10, also if i am how do i go about signing up for this?
Many thanks RhysAugust 8, 2010 at 10:05 am #65520
You are eligible to claim up to 40p a mile for the first 10,000 miles and 25p thereafter Rhys. The difference between what your employer pays you and what you can claim as an approved mileage payment can be used as an allowance against your tax liability. You may have to fill in a self assessment return to claim the allowance – if you ring HMRC’s Taxes Helpline on 0845 300 0627 they should be able to help you. I say should ….
kontracta.com - fixed monthly fee accountancy service for contractors & freelancers.Colledge & Co, Chartered Accountants for SMEs.sole trader accountants.com - online & telephone monthly fixed fee service for UK based sole traders & partnerships.September 22, 2010 at 9:34 am #66088
My partner works as a sub contractor. He is paid for the materials, a perecentage of the net income for the job undertaken and they also calcualte his income tax. He has one of their works vans which stays with him 24hrs. They pay the insurance. He is also trying to start up his own business and uses the same van for this.
He has saved every petrol receipt and records the mileage. He doesn’t reclaim the petrol or mileage from from the contractor. I didn’t think you could claim petrol receipts at all; is it just mileage you can claim?
Rather than keeping petrol recipts should he just put in a claim for mileage to the contractor for the work he does for them and then put in the mielage for his own jobs on the self employment tax return?
Thanks in advanceSeptember 22, 2010 at 9:57 am #66089
Your partner wont be able to claim on two counts:
1. Its a van not a car (fixed profit mileage scheme is for cars)
2. It sounds like he doesn’t even own the van in the first place
I imagine the only valid claim would be for fuel (both from the contractor subject to their rules and the self employed work on his tax return), but he needs to watch that the main employer doesn’t take exception for using this vehicle for his own business. Normally you would be only permitted to use a van for the purpose it was provided, that is to say doing work for the contractor and not his own.
I hope that helps
James Smith [i]Chartered Accountant[/i] www.jamesesmith.co.uk--------------------------- Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VATOctober 6, 2010 at 7:27 am #66334
I freelance for a company, who pay me a flat rate per day. This freelance work includes varied travel upto 200 miles on some days to reach the client. Should the company I freelance for include mileage allowance or should I recommend expenses. As I feel the flat fee I am being paid does not cover this mileage adequately especially when I look at the 40p/mile comments above.
TiffiOctober 6, 2010 at 10:26 am #66339
The contract between you and the company paying you for freelance work is entirely up to you to negotiate. They dont have to pay you any particular amount.
In terms of tax, if you are using you own private car to make these trips, then you can certainly claim mileage allowance on your personal tax return when you declare your incomes. If the company pays (say) 25p mile, which is less than the allowance of 40p, you can claim the difference on the tax return as a business expense, although be careful here. You only get tax relief on the difference, not the whole cash value. So a shortfall of 15p/mile is only worth 4p real money per mile for a basic rate sole trader and 6p for a higher rate tax payer. Appreciate that might be a bit confusing.
James Smith [i]Chartered Accountant[/i] www.jamesesmith.co.uk--------------------------- Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VATOctober 19, 2010 at 4:37 pm #66593
I work in sales, use my own car, don’t receive a car allowance and claim 22p per mile from my company. From my understanding of this thread, I will be able to claim back 18p per mile. This is where my understanding ends. Is this to be claimed back at the end of the tax year? And also, say for instance I covered 5,000 business miles per year, at basic rate tax level, how much could I claim back? Do I get it in the form of a rebate?
Thanks in advance.October 19, 2010 at 4:58 pm #66595
Yes you will be able to claim for the shortfall of the mileage but it will be the tax relief on 18p per mile (18p x 20%) rather than 18p itself.
It depends on the level of expenses you are claiming as to whether you will be able to claim this without the need for filling in a self assessment tax return – or not. The guides below on how the relief works, how you can claim and the starting point for self assessment returns are below:
kontracta.com - fixed monthly fee accountancy service for contractors & freelancers.Colledge & Co, Chartered Accountants for SMEs.sole trader accountants.com - online & telephone monthly fixed fee service for UK based sole traders & partnerships.