Neil Smalley

I'm trying to work out my tax return for the year.
I can claim that I use my car for buisness purposes(which i do )
I get a set rate per year to buy and run the car(No mileage allowance, just a fuel card )

For example, if my allowance per year is £10000(it's not btw)
and I pay higher rate tax on it(40%). Do I put the figure for total allowances as £10,000 or £6,000.

Should it be £6000?? as I've already paid PAYE tax on the 10K.
or will this be another case of double taxation???

AndyC_772

iTrader: (2)

I'm in a similar position (car allowance plus fuel card), although I do a trivial number of business miles.

The car allowance itself is treated exactly as income - in fact it's all lumped together (salary plus allowance) and goes in the same box on the return. The fact that your employer separates them out, and actually expects you to spend the car allowance on running a car, isn't interesting to the taxman. Only the total counts.

The fuel card is treated as a taxable benefit, equal to the amount you've spent on fuel with it in the year. Your P11D should show how much this is - in my case (about 12000 miles in a Scooby) that's about £2000. This figure goes in a separate box on the return (labelled something like 'car fuel benefit' - check the notes).

All the figures that go on your tax return should be gross figures. Any tax you've already paid, which should have been deducted at source by your employer, is added up (check your last payslip of the year or your P60 for the total) and put into a separate box on the return. This figure is deducted from the bill you'll get from the taxman, so don't worry, you won't be taxed twice.

Normally the only tax you'll be asked to pay is the tax on whatever you've spent on your fuel card - in my case 40% of £2000. Your employer should have already deducted all the other tax at source, so you've already paid it.

The Inland Revenue does have a mechanism for granting tax relief on the number of business miles you've done over the year. There's a minimum number of miles you need to have done in order to qualify for anything. I didn't meet this minumum threshold, so I can't help much further; it used to be the case that you could claim a rate per mile depending on engine size, but that may have changed since I last looked.

Hope that helps,

Andy.

templar

you can still claim an allowance under the fixed profit car scheme. for cars between 1501cc and 2000cc, the rate is 45p per mile for the first 4000 business miles, and 25p thereafter. work out your business miles (not including travel to/from your normal place of work), work out the total allowance, and enter it in the relevant box on your return.

Roj

Neil Smalley

Now I AM confused

This bit from here
http://www.inlandrevenue.gov.uk/pdfs/emp2001/ca33.pdf

Says that, I don't have to pay tax on my fuel card because "directors’ or employees’ privately owned cars" are excluded. Thats me right I OWN my car, it's not a company one.

Now regarding the actual sum used. All figures in the tax return should be gross, correct. BUT where I am even more muddled is that when working out the detailed tax relief(I have all the figures and receipts).

from here http://www.inlandrevenue.gov.uk/pdfs/ir125.htm


Step 1
Allowances received from your employer ________ A
£
Step 2
Travel costs for the year
Insurance _______________
Road fund licence _______________
Fuel and oil _______________
Servicing and repairs _______________

Capital allowance _______________

Total travel costs for the year _______________ B

Step 3
Business miles travelled _______________ C
Total miles travelled _______________ D

Proportion of costs relating to business travel

________ C x _______ B _____ E
________ D

Step 4 _____ F
Difference between A and E

If A is bigger than E, F is your taxable profit.
If E is bigger than A, F is the amount on which you can claim tax relief.


In the allowance field. If I give the gross amount then that's not the actual benefit I get from the allowance, cus the govt nick 40% of it. In the rest of the sums are to work out what benefit i've had(or not) from the allowance. I.e If My allowance has exceeded my expentiture then the difference is taxable. However since i've not got any benefit from the 40% the govt get then why should I include it, as though i have???

Bas

Neil

Your car allowance is taxed through the PAYE system and will therefore be included in the amounts shown on your P60 (gross pay and tax deducted)

You can claim relief for business mileage travelled and this can be done in one of two ways.

Firstly the Fixed Profit Car Scheme using the rates mentioned above for business mileage only.

The second method is on an 'actual' basis and involves apportioning your total motor expenses between business and private mileage. This is the calculation which you have detailed.

You are entitled to choose whichever method benefits you the most.

The relief claimed is then entered on page E2 of your tax return (the back of the Employment page) as expenses incurred in doing your job.

This amount is then deducted from your gross income before calculating your tax liability.

Say for example your claim amounted to £1,000 the benefit to you would be at your marginal tax rate say 40% i.e. £400.

Hope this helps

Bas

Neil Smalley

Cheers bas.

Lemmie see if I get this...

If I go option 1, then I just take into account the default Inland revenue mileage allowances. Because my gross allowance is taxed at source I can exclude it from from the milage calculations??

Since i've chosen option 2, then I use the Gross figure right?

Still seems odd, the way the maths work out??

I think maybe a trip to a tax accountant might be useful...

Bas

Neil

Either way your gross pay remains the same i.e. your gross regular salary plus your car allowance and is shown on page E1 of your tax return.

The two methods simply give you the relief to claim on the second page of the Employment section and reduce your taxable pay by the relevant amount

Cheers

Bas

PS I might be able to recommend an excellent tax accountant

babber

I've got a big drama pending in April 2002, when the tax laws change.

Company car is a MY00 Turbo, and I'm already paying a small fortune in tax 18k plus per year. Anyone know how much more I'll be paying (40 percent tax) at present

Oh and my Director had a fuel card (lucky git) and he paid a **** load of tax on it.

Cheers Phill C

templar

currently, charge is based on business mileage. up to 2500 miles is 35% of list price, up to 18000 is 25% of list price, over 18000 is 15%.

so, if you do between 2500 and 18000 business miles in a tax year, the tax payable (if higher rate) is 40% of 25% of list price i.e 10% of list price is payable in tax.

new system based on emissions on a sliding scale. most scoobs will almost certainly be off the top end of the scale and be charged at 35% of list price. so, the tax payable is 40% of 35%, i.e. 14% of the list price

the tax is therefore an extra 4% of the list price per year.

ro