Company pays me the mileage rate of a company vehicle

Company pays me the mileage rate of a company...

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I get paid a car allowance and my business mileage is paid at a variable amount based on HMRC guidelines which apply to company cars, last year the rate was  £0.18 per mile and from Jan14 to end March 14 is has changed to £0.17 per mile (reviewed quarterly). My question is, as the vehicle is owned by myself so in other words its privately owned, should the business be using the HMRC guidelines for company vehicles as the basis to pay my business mileage? The company argument seems to be that as I opted not to take a company car and take the car allowance instead, my allowance is being treated as a company car in lieu.

Thanks in advance.

Replies (9)

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By User deleted
24th Apr 2014 22:22

They can pay ...

... whatever your contract states, but you can claim the difference up to the FPCS rate of 45p/mile first 10,000 miles and 25p/mile thereafter on your tax return.

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By johngroganjga
25th Apr 2014 06:13

Agree with the above, but what does your contract say? Are there other employees using their own cars on company business, and do they also receive only the same miserly mileage rate?

Yes you claim the difference as a tax deduction, which will help a little, but you will still be out of pocket.

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By paulwakefield1
25th Apr 2014 08:36

Seems fair to me

The 45/25ppm is meant to cover the whole cost of owning and running a vehicle. Since you have taken a car allowance, a lot of that cost is already covered by your employer.

Your company appears to be paying the fuel rate for a >2l diesel/lpg. Does that describe your vehicle? What is the car allowance designed to cover - just the capital costs or insurance, road tax, etc. as well? If the former, you will be losing out on those additional running costs but that will to a certain extent be covered by a claim as outlined by OGA.

And they can pay whatever they want anyway as has been pointed out.

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By johngroganjga
25th Apr 2014 08:50

Logically the car allowance should compensate you for not having a company car available for your private use.  If it does more than that - and subsidises you to provide a car for the company's use then yes you are not out of pocket, but that would be a very unusual provision, and the level of the car allowance would logically have to vary from employee to employee according to how many business miles they were expected to do in their own car.  Does it?

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RLI
By lionofludesch
25th Apr 2014 08:59

Agree with all that

Without figures, it's hard to say what's fair and what isn't.

So far as the 45p/25p goes, that's what HMRC are prepared to stomach - it's neither a maximum nor a minimum for employers to pay.

The only thing you can do is renegotiate your contract.  If you think you're out of pocket, put your case to your employer.

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Euan's picture
By Euan MacLennan
25th Apr 2014 11:59

Is the car allowance taxed?

A round sum allowance should be taxed under PAYE as part of your salary.  If it is, you are entitled to claim the difference between 45p/25p and whatever rate you are reimbursed for your business mileage in your own car.

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By Chris08
25th Apr 2014 13:03

This is common

The big 4 firm I used to work for introduced this arrangement about 5 years ago.

As has been stated, the theory is that the same mileage rate should apply to those people who actually have a company car,and those who choose to take the cash alternative. The full 45p was still available to other staff.

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By tebthereb
26th Apr 2014 09:26

NIC

Would also be worth looking at how the allowance is being subjected to NIC, bearing in mind the Total People case. Lots of articles on the web about this.

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By David Heaton
28th Apr 2014 23:02

Normal public sector approach

The payment of an allowance through payroll is presumably supposed to compensate you for the non-fuel costs of having the car available for business use.  That's how a lot of employers, particularly in the public sector, operate. 

Your employer should in theory be using your business mileage each month and deducting 45ppm from the total of your monthly allowance and the 17ppm mileage payment before it taxes and NICs the monthly allowance. 

The fuel allowance is fair, as it is a reasonable (albeit very broad brush) reflection of fuel costs for business motoring. 

The questions for you are more whether the car allowance is at the right level and whether you are getting tax and NIC relief on the monthly element.  You can claim the tax relief yourself via a return or letter if the company isn't already handling it, but the NIC has to be done through payroll (unless you want to battle all the way to the Court of Appeal to get your money back, as Total People/Cheshire Employer & Skills Development Ltd did).

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