A new client is a company director. The company pays the HMRC rates for using his own car on business trips (45p per mile up to 10000 miles and 25p per mile thereafter). So far - so good. However, he has now produced his 2016/17 P60 and indicates that some £4000 of the income shown on the P60 is for travel expense reimbursement at the above rates.
My understanding was that any amounts paid in excess of the agreed rates goes on a P11D and any shortfall paid as against the HMRC rates are claimable on the director's tax return but where the amounts paid equate to the HMRC rates - no reporting is required.
I can't think of any circumstances in which the amounts paid out for use of his own car in these circumstances end up on the P60. Am I missing something?
Replies (17)
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Is he trying to tell you that part of his physical drawings have been mis-classified as earnings and put through payroll by mistake?
Could it be that he's confusing mileage payments with having an essential user car allowance built into his annual salary and taxed through PAYE?
It looks like an error, he should contact the payroll department of his employer for clarification.
Oh I doubly apologise if you mistook my response for an attempt to answer your question. I was being - it turned out inappropriately - pedenatic.
The answer to your question is that there's been some sort of a ¢0¢k up.