Tax allowance for fuel used to and from work on PAYE

[SA Gold]

hi,
I've had a Google but everything i found leads to either using a personal car for business mileage, or company car with private fuel.

I want to know if there is any personal tax allowance for an employed person with fuel costs as a result of traveling to work.

Cheers!

[SA Gold]

Re: Tax allowance for fuel used to and from work on PAYE

I doubt that there is if you are on PAYE rather than SE or Ltd co., although I'd say SXGuy would probably the best person to answer this one.

hi FP,

I don't think there is either, but overheard a conversation which suggests there maybe, although i may have misheard, or they have got it arse about face. Don't mind calling HMRC but we all know their call queues can take a while so thought i'd ask the helpful members of AAD!

[kilasuit]

Re: Tax allowance for fuel used to and from work on PAYE

Company's can claim the basic vat back and also get discounted fuel through various schemes.

I kno that as an ex-mcds employee you could get discount at Sainsburys and asda for fuel but it involved reload able gift cards

Even then it was only 5% off

[SA Gold]

Re: Tax allowance for fuel used to and from work on PAYE

Company's can claim the basic vat back and also get discounted fuel through various schemes.

I kno that as an ex-mcds employee you could get discount at Sainsburys and asda for fuel but it involved reload able gift cards

Even then it was only 5% off

ah, so not the greatest of savings then! Thanks for posting thou!

[SA Gold]

Re: Tax allowance for fuel used to and from work on PAYE

Unfortunately when you are on PAYE you have very few tax reduction options, unlike other setups, where you can deduct expenses necessary to carry out your work. That's why people often use umbrella companies instead, when they haven't got their own limited company. Although this isn't an option when you are employed on a permanent basis, they can be used by temps, freelancers and contractors. Before I had a ltd co I used such a company and I could really appreciate the tax efficiency, even on a relatively modest rate of pay.

One of the reasons i am hoping to go limited one day: pay tax on profit instead of earnings

[vint1954]

Re: Tax allowance for fuel used to and from work on PAYE

hi,
I've had a Google but everything i found leads to either using a personal car for business mileage, or company car with private fuel.

I want to know if there is any personal tax allowance for an employed person with fuel costs as a result of traveling to work.

Cheers!

Afraid not Missy. If you are on PAYE, you cannot claim for your milage to work.

[SXGuy]

Re: Tax allowance for fuel used to and from work on PAYE

No, there is no allowance on PAYE, there would be on Self Employment.

You can sometimes have an agreement with your employer to pay your fuel to travel to and from work, he would calculate the cost, and you would probably receive a P11. Which would affect your tax coding.

On a side note, Missy, dont be fooled by Ltd company benifits, if i was you, id be self employed, i wont go in to all the reasons now, but ill answer the one you commented on.

Tax on profit yes, but thats Net Profit, same as Gross Paye, dont get the two confused.

Secondly, ALL money earned by the company, is the companies, not yours, you can only draw on this money through PAYE (which is taxed) and dividends (which is also taxed)

So you will have corperation tax, employment tax (including Employers NI) and Dividend tax all to pay on ltd company.

Plus HMRC have guidlines on the ratio between dividend payout and PAYE payments, not as easy as you think.

Self employment, ALL the money is yours, can be drawn on WHENEVER you want. and the only tax you pay, is net profit.

So if your net profit was say 20k, you would pay 20% on £11895.

Ltd company with same net profit, you would have already paid tax, employees Ni and employers NI before net profit, then tax at 20% on the whole 20k.

[mgfboy]

Re: Tax allowance for fuel used to and from work on PAYE

I thought there was a form that a PAYE person can use to claim tax relief on fuel used in business and if my memory serves me correctly there is a section on the SA form.

Also to minimise tax in my view LTD companies are the way to go, assuming that you dont fall fowl of IR35 and even then there are some breaks that can make it advantages.

PS this might be useful

http://www.direct.gov.uk/en/MoneyTax...iefs/DG_078375

[The Tech Clerk]

Re: Tax allowance for fuel used to and from work on PAYE

Tax on fuel to get to work, no I tried years ago as I had to travel between two different locations for the same company and the answer was if you were self employed yes, you are not the answer is NO.

[mgfboy]

Re: Tax allowance for fuel used to and from work on PAYE

Tax on fuel to get to work, no I tried years ago as I had to travel between two different locations for the same company and the answer was if you were self employed yes, you are not the answer is NO.

It depends on the nature of the travel, you can't claim from your home address to your normal place of work ( unless your a
contractor the 2 year rule comes into play), but if you have to go to other sites etc, it shouldn't be a problem.

I've done it.

[SXGuy]

Re: Tax allowance for fuel used to and from work on PAYE

I thought there was a form that a PAYE person can use to claim tax relief on fuel used in business and if my memory serves me correctly there is a section on the SA form.

Yes there is, on a SA form, but that information is copied from the P11 that your employer gives you, "if" he agrees to give you an allowance for fuel, which is what i said previously.

[SXGuy]

Re: Tax allowance for fuel used to and from work on PAYE

It depends on the nature of the travel, you can't claim from your home address to your normal place of work ( unless your a
contractor the 2 year rule comes into play), but if you have to go to other sites etc, it shouldn't be a problem.

I've done it.

Not quite true im afraid, if you are a contractor, who also works from home, then yes you can claim travel costs to and from work, but it has to be a reasonable amount.

[SA Gold]

Re: Tax allowance for fuel used to and from work on PAYE

Just wanted to say thanks for all the replies on this thread.

I now know tax relief does not include travel to and from permanent place of work.

SXGuy - Thanks for the pointers here. When i had a brief chat with someone in the past they said the way to do it (IT Contracting) is go limited (and not use one of these umbrella services), payroll yourself £6K a year salary and then take dividends, car, office space in the house out of the company which they said would cost about £600 a year in accountants fees. They said they would also register the company and have their address for all the stuff companies house etc send out (is this a lot?).

I guess self employed sounds far easier and could be done and covered by professional indemnity insurance. If i was dealing with Jo Public then i guess this would be far better, although it would appear some companies want to deal with companies - even thou it is one man band.

[mgfboy]

Re: Tax allowance for fuel used to and from work on PAYE

Not quite true im afraid, if you are a contractor, who also works from home, then yes you can claim travel costs to and from work, but it has to be a reasonable amount.

SXguy I don't want to get into a argument on this but I have probably dealt with far more PSC/contractors that you mate and what you say doesn't make sense.

Firstly working from home has nothing to do with it, it depends on where your company is based, it may be at home or it could be an office. Secondly reasonable amount means nothing, it just has to be wholly and exclusively from business purposes, you could take a helicopter if your company could afford it!!!

[SXGuy]

Re: Tax allowance for fuel used to and from work on PAYE

Just wanted to say thanks for all the replies on this thread.

I now know tax relief does not include travel to and from permanent place of work.

SXGuy - Thanks for the pointers here. When i had a brief chat with someone in the past they said the way to do it (IT Contracting) is go limited (and not use one of these umbrella services), payroll yourself £6K a year salary and then take dividends, car, office space in the house out of the company which they said would cost about £600 a year in accountants fees. They said they would also register the company and have their address for all the stuff companies house etc send out (is this a lot?).

I guess self employed sounds far easier and could be done and covered by professional indemnity insurance. If i was dealing with Jo Public then i guess this would be far better, although it would appear some companies want to deal with companies - even thou it is one man band.

Ah well I.T Contractors are a whole different kettle of fish, they fall under whats known as IR35.

Basically, i.t contractors over the years have had to change from self employement to being a ltd company. I wont go into all of IR35, but lets just say, if you work for 1 company, you would techincally be employed by them, so to get round this, you have to become a company yourself.

HMRC are rooting out all self employed people who have 1 contracted job and demanding the either become employed by that company or become a company theirselves.

£600 is actually quite reasonable for an accountant to charge for a ltd company. We charge more than that.

6k a year PAYE is NOT good advice for an i.t contractor, if HMRC were to inspect you, they would argue that you are avoiding tax by paying yourself a low wage and taking the rest as dividends to take advance of the 10% tax relif on dividends upto 10k.

This has been common practise for years, but im afraid HMRC are hot on this in recent years, and its no longer accepted.

You have to pay yourself a reason wage compared to the level of income your i.t contractor would receive. So its a balance between that and taking dividends.