Tax Allowance On Car For Work.

[Theland1]

My eldest son has been in a job for 15 months as an assistant area manager, getting his petrol paid for, and �2,100 / year for car maintenance / servicing - his own car.
He drives 30,000 mile / year.
Can he claim tax allowance towards his car expenses, or are these cancelled out by his �2,100?

[anniebird]

He must keep a record of all journeys for Business purposes, not including driving to the office - this is not classed as Business, and then he can claim tax relief on those miles. The current amount is 40 pence per mile for the first 10,000 miles and 25 pence for each subsequent mile. If he has not already been recording his mileage then hopefully he will have a diary or reports that he can refer to so that he can recreate these records. He should be declaring the amount paid to him for petrol and the �2,100 as income so that the tax office will then charge him tax on the excess if he has received more than the mileage allowance or give him a refund if he has received less. I have been doing this for a number of years.

[Theland1]

Thank you.

[Oneeyedvic]

Hang on - if he is getting his petrol paid for (as indicated above), he cannot claim tax relief - his employer will be claiming this.

Is his personal mileage paid for? If it is, he needs to make sure the tax office know this as it impacts on his tax code.

[buildersmate]

No, Annie is right.
The way it works is HMRC 'allow' an amount as she has indicated in respect of business miles for the employer to be paid free of tax or NI - any more than that is a taxable perk.
So if he's getting say 15p per mile for petrol from his employer and he did say 30000 miles in the year, HMRC would allow his employer to be paid (40-15)*10000 plus (25-15)*20000 in tax free allowance. This is �4500. However he would have been paid �2100 plus (15*30000) by his employer. This �6600. So his employer ends up having to declare �2100 (the difference) in effective taxable income on his P11D and he has to pay tax on this �2100.
The answer is that on your figures he actually OWES tax on part of this allowance because it is more generous than HMRC allows.