Can my daughter claim car expenses against her tax?

Question

My daughter works for a large corporation as a rep on a PAYE basis. She drives her own car and does in excess of 20k per year. Her company pays for the fuel and gives her an annual car allowance of £5400 but she has to pay 40% tax on that. because of the mileage she does, the car is depreciating very fast and repair bills and servicing costs are very high. Can she enter any of these as a professional cost against her earnings?

Answer 1

No. Car repairs & depreciation is included in the mileage allowance provided by your employer.

However you state she is being taxed at 40% based on her MILEAGE, this is incorrect.

Your daughter does drive her own car and therefore you have to divide the £5400 your daughter gets by the amount of mileage to see what she get per mile.

Then work out if the if this amount is lower or higher than the mileage allowance threshold of 40p for the first 10,000 miles and 25p for the remainder.

If she is getting paid more than the authorised mileage allowance then this excess is regarded as taxable expenses (TEP) and taxed at 40% (if a higher rate taxpayer). If the amount per mile being paid is less then you can claim tax relief on the difference as expenses.

As you state she is getting taxed at 40% I assume its the excess thats getting taxed at 40% and you cannot reduce this amount.

You do seem confused so your daughter should either call/visit the HMRC website

Answer 2

Yes, she can claim these costs because, at the moment, she is being taxed as though these are extra incomes whereas in fact it is a reimbursement for expenses. Get in touch with the tax office - they're quite friendly and will send out the right forms. She could also ask her company - I'm surprised that they don't just have an expenses form in which she can claim her expenses against as there are no tax implications. I'd ask the ocmpany first, then the tax office.

Answer 3

Yes she can.

The claim must be for business miles only - normal commuting to work mileage is considered private.

The statutory rates which can be claimed are 40p per mile for the first 10,000 miles in any tax year and 25p per mile for mileage above that. These rates are to cover the whole cost of running the car including petrol so she must reduce her claim by the amount of petrol paid for by the company.

She will then receive relief at her top rate of tax (which you say is 40%) on the net claim.

Claims can no longer be based on the actual costs of running the car.

Answer 4

No, she already gets benefit in the form of the car allowance. This is supposed to go towards the cost of the car and maint.

Car cash allowance are taxed at normal rate.

if it doesn't cover it, she has an issue with the employer, not the TAX office. This situation should be resolved with higher car allowance or expensed garage bills.

i've been in the same situation for years.

Answer 5

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Answer 6

I believe she can, but unfortunately I am not aware of the form that is needed for that. If she has her taxes done by a CPA, then they should definitley know what she can claim and file the proper forms.

Answer 7

Not really an answer,get in touch with your local inland revenue office and explain the situation.They will give you accurate info and send the appropriate forms.Good luck.