In 04/05 a company director has business mileage of £2,000 (5,000 x 40p) in his own car but does not receive the cash from the company as they want to keep the cash in the business. They also received zero salary for the same reason.
Can relief be obtained on the £2,000 + if not can the £2,000 be c/fwd to next year and relieved against salary?
Mike Bettridge
Replies (3)
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Afraid not, Simon
As Mike points out in his question, the director has no earnings, and per ITEPA 2003 s.232 mileage allowance can only be relieved against "earnings in calculating net taxable earnings in the year".
The company can pay him the AMAs (as Neil says, an entry in loan account is enough) without tax charge, but unless they do so he can only get relief against earnings - not against general income.
Directors Loan Account
Pay the mileage into the directors loan account. You can also pay salary in the same way - if the director needs to use up their personal allowance band.
There is no need to pay actual cash. It can all be done via internal loan-backs if you want.
NeilW