Car Allowances TAX

  STREETWORK 16:02 17 Feb 2011

My employer has just capped out milage expenses to the highest HMRC will allow @40ppm which has not changed for several years. Fuel costs are more than the allowance will cover unless my car does 67mpg, but it does about 35-40mpg. Is there any way of claiming back from Tax on the difference? any website that can calcualte it. the HMRC website appears set to confuse...

  Pine Man 16:26 17 Feb 2011

By my reckoning if your car does 40 mpg and you do 40 miles it will use one gallon of fuel and you will claim 40p per mile for this journey giving you £16.

That is £16 to help you buy one gallon of fuel. It's nowhere near that price where I live or am I missing something?

  Woolwell 16:26 17 Feb 2011

My understanding is that the 40p per mile is on the first 10,000 miles and drops after that click here.

The tax man is likely to want to tax you if you are paid more than the 40p per mile as you will have had a benefit.

You are right that the figure has not increased for many years. The Governments (note the s) have wanted to discourage driving and I cannot see this figure changing.

  wiz-king 16:32 17 Feb 2011

I seem to remember a Minister (Tebbit?)saying something like 'on yer bike'.

  Colin 16:42 17 Feb 2011

Pine Man - the 40p per mile is not just for fuel but also to cover other costs associated with running a car such as insurance and servicing.

  Pine Man 16:50 17 Feb 2011

Please read the post from streetwork again.

'Fuel costs are more than the allowance will cover'

That is what my answer was based on.

  STREETWORK 18:13 17 Feb 2011


The 40ppm does need to cover the running costs such as business insurance, road tax, MOT, servicing, depreciation, etc, etc. Pehaps I should have included this in the post. This is how I based the 67mpg on. Between MOT's I did 8,090 miles for the employers business and only 1,230 private miles. The current 40ppm that the TAx allows falls well short of current prices. However, I am now looking at the possibility of car lease but its appear more expensive looking at the information on HMRC website...

  the hick 20:23 17 Feb 2011

At 40p per mile, I reckon this is a good deal for your employer. If you had no car available, what would be the cost to your employer of a lease car for you to drive? I presume, it is not a condition of your employment that you must have a car available.

  Admiral Allstar 19:16 18 Feb 2011

if you did no business mileage would you still own the car?

  oresome 20:26 18 Feb 2011

The AA who regularly calculate the cost of running a car have been saying for some time that the HMRC mileage allowances don't fully cover the actual cost.

click here

  STREETWORK 20:34 18 Feb 2011

If I did not need a car then I would not really need it for my personal use...

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