I had a feeling that at some point the Revenue have said that the (now) 45p/25p AMAP rate is "representative" rather than being intended to cover the full cost so it shouldn't be taken as authoritative on the cost of running a car. However, I now can't find where I've seen that. Can anyone help? (I may be remembering/looking for somthing that doesn't exist.)
Obviously some people will make a profit and some will make a loss at those rates, and it's far simpler than the old FPCS - but that's me saying that rather than the Revenue.
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My understanding ...
like yours was that these rates could be used as an approximation of cost without evidence and would not yield a BIK. I have interpreted that (although never bothered to act on) as if you provide evidence of a higher cost then you could use that higher figure.
AA car costs
Hi - I'm pretty sure the original 40p was based on The AA's mileage costs for a car of up to £12,000 running 10K miles per annum. If you look at their 2011 table this now stands at 45p.
Given that the intention is not to reward higher carbon producers this seems fair.
The sums paid are taxable
Hi - this may be stating the "bleedin obvious" but, ignoring fairness of the rate, is the client taxing the mileage paid for home to work, or am I missing something?
Tell them they should be grateful for anything
You have explained that the employer is paying mileage for the cost of the commute and in fact is grossing this up so that the employee receives the amount net.
Frankly I would tell them they should be grateful they are getting something and that if they are not happy they no what to do. There are plenty of people that would be happy to get something for their daily travel.
Have you compared the rate they are getting to the fuel only rates. If I had a snotty employee I would suggest this may be a route to justify the rate being paid but as I have already said I don't think the employer has to justify themselves at all in this case.
From my experience
when an employer moves premises it offers to cover the additional costs to the employee rather than lose them. I had to do this a number of years ago for a part time worker who has since moved on. For us losing that employee would have been a much greater cost including finding someone new than additional salary to cover trhe comute.We did not do it by using the mileage rate, just a hike in salary..
Mileage Allowance
The HMRC rates are absolute in terms of what can be reimbursed without incurring atax / NICs liability. Also employees can claim a tax deduction if less then the AMAP rate is paid.
The postings above appear to be concerned with only the tax aspects, but as it relates to home to work mileage payments, there is a Class 1 NICs liability.
A starting point?
Here is a link to a CIOT letter to the Minister - not HMRC but it might help.
http://www.tax.org.uk/Resources/CIOT/Documents/2011/03/110308%20AMAPs%20final.pdf
I suspect the very last paragraph is the best indicator for you.
Before 6 April 2002 the mileage rates were expected to more than cover the full costs of running cars - http://www.hmrc.gov.uk/manuals/nimmanual/NIM05715.htm
The fuel only rates continue to look at real costs -
http://www.hmrc.gov.uk/cars/fuel_company_cars.htm
The changes in 2002 reduced the mileage payable for large cars and made it the only claim available for employees as they could no longer claim the real costs where they were higher.
The purpose of the change was to encourage people to move to smaller more efficient cars.
I have copied this table to demonstrate the move to statutory rates if you are interested.
Fixed Profit Car Scheme
Under the Fixed Profit Car Scheme (FPCS) the maximum tax free mileage allowances for employees using their own cars for business are as follows:
2001/022000/01 First 4,000 business milesBusiness miles over 4,000First 4,000 business milesBusiness miles over 4,000Engine Capacity Up to 1000cc40p25p28p17p1001cc - 1500cc40p25p35p20p1500 - 2000cc45p25p45p25pOver 2000cc63p36p63p36pFlat rate42.5p25p40p22.5p
Notes
Payments in excess of FPCS rates – excess is taxable. Payments at less than FPCS rates - employees can claim tax relief for shortfall. Employees can also claim tax relief for some of their interest paid on a loan to buy a car used for business.
NICO use the FPCS mileage rates for up to 4,000 miles. If the employer's mileage rate is above these rates, there will be a NIC liability on the excess.
2002 and Beyond -
Proposed rates from 6 April 2002 are 40p per mile for the first 10,000 business miles and 25p per mile thereafter, regardless of engine capacity.
Marion ...
... I can't open the link, I just get a blank page.
I have tried fiddling with the encryted pages setting!
b****r
My IT guys gets really antsy when I start fiddling with settings - I had to threaten him with whips and chains to let me have admin rights in the first place - lol
Bizarre...
... tries on a different PC and opens fine, but not on my main one, I even tried going in from scratch on the CIOT website, got as far as the link to the letter and then ... ... nothing! :o\
It is OK ...
... IT have sorted it out.
My IT section are fantastic, if anyone wants their details try here:
http://www.youtube.com/watch?v=p85xwZ_OLX0
Glad you sorted it out
I love that programme - my favourite It joke for years was the new microsoft keyboard
http://uncyclopedia.wikia.com/wiki/CTRL-ALT-DEL
scroll down till you see the image
If you're interest in this issue, try our company car group
While this isn't strictly a company car issue, it is obviously something that appeals to those of an automotive persuasion. If you would like to delve into car tax and other related issues, come and join our new Company Car discussion group.
Get your motors running!