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Income for tax credits - mileage allowance

A client works through her own ltd company as a driving instructor. Income at present is low but improving and has been subsidised by other part time work. 

A small salary is drawn plus mileage allowance at the 45p a mile rate as the car is not currently owned by the company.

She has been informed by the tax credit office that the mileage allowance should be included as part of her income for their purposes. I checked this with the agents helpline and after some discussion their end they agreed although they thought the allowances had to be included on the P11d and were taxable. They were confused when I told them this was not the case.  

Any guidance would be helpful.


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25th Nov 2011 15:57

No-taxable mileage allowances don't count


Approved Mileage Allowance Payments (45p up to £10,000 miles and 25p thereafter) don't count for tax credit purposes and neither are they reportable on form P11D/P9D.

Anything paid in excess of the AMAPs rate will count as income for both tax credits and form P11D/P9D.

Here's the address for HMRC's guidance on the matter

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25th Nov 2011 16:02

No-taxable mileage allowances don't count

Many thanks for the quick reply. I couldn't see logically why they should be included but since when has logic applied here.

I will follow up through your link.



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