Good afternoon all,
I would appreciate your expert opinion on this matter. Employed person earned £11,000 with tax deducted at source £200. He has done 4,000 business miles. Therefore mileage claim is 4,000 x 45p = £1,800 (if enough tax had been paid by the person, the tax benefit would be £360 - £1,800 x 20%). Employer did not pay for his mileage.
Simplistically, the assessable income would £11,000 less £1,800 mileage claim = £9,200. As this is below the personal allowance (2014/15 £10,000), there is no taxable income.
Question 1: Is it possible to restrict mileage claim to £1,000? This would be so as not to waste the personal allowance. Otherwise, if restricting the personal allowance to £1,000, can the £800 not utilised be carried forward to the next year? or indeed carried back to past years? I would appreciate if would point me to the relevant HMRC help sheet or tax act.
Question 2: If carry forward of mileage claim in not permissible, the tax refund the person will be eligible for would be what he paid - £200. Therefore in effect he is losing the benefit of £160 (being £360 less £200). Is this correct?
Many thanks in advance for your help.
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Replies (3)
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No benefit
There is no rule which makes you claim expenses so you can only claim for 1,000 miles if you wish.
However, claims for expenses can only be for the actual date so you cannot delay a claim for 800 miles to the following year.
Perhaps you should be talking your client out of donating the 100% cost of the business mileage to the employer rather than looking at the tax relief due
2015/16 - transfer part of their PA to spouse....
.... If they have one. This would reduce PA for your client and therefore not waste it.