In response to our recent news item reminding everyone about the mileage rate change in April, one individual asked 'Is this supposed to be for all employees being paid a mileage amount from their employer?'. The individual works as care assistant making visits to the elderly as part of her job. Her employer pays her an amount per mile on top of her salary and the mileage amount is tax free.
An employer can choose to pay any amount they deem fair in terms of mileage. They could pay a low amount, say 20p per mile or a high amount of say £1 per mile - it is their choice. However an individual receiving any mileage payment from their employer should bear in mind the following:
If they received a mileage rate in excess of 45p per mile they would have to pay tax on the excess amount. So if they did receive £1 per mile they would received 45p tax free but pay tax on the additional 55p.
If the individual is paid less than 45p per mile from their employer they can actually claim back the tax on the difference on the amount they get and the maximum allowed of 45p, usually by submitting a Tax Return. Once agreed HMRC will make a change to their PAYE code which will in effect reimburse this tax to them. Don't forget that the maximum is 45p per mile up to 10,000 miles then it reduces to 25p per mile for the rest of the tax year. Your mileage is 'reset' back to zero at the start of each tax year.
We welcome cllient questions, feedback and comments so please keep them coming.
