An alert has been issued to drivers who may be unknowingly paying too much tax; however, there’s a simple way you can reclaim it from HMRC if you’re eligable to do so
An alert has been issued about HM Revenue and Customs (HMRC) as drivers may be unwittingly paying extra tax, and it comes on the heels of households being informed they could be due a substantial payment. For those not up to speed with the latest motoring tips, there are a few things you need to know about the money you could be entitled to.
Kim Sones, a business advice guru on social media, recently highlighted some key points about driving that could mean you’re owed some extra cash. When it comes to HMRC, there’s a crucial piece of information you need to know about your driving expenses.
Understanding your tax, what you owe and what you’re entitled to is vital. It was also recently revealed that HMRC can target individuals with something known as “Direct Recovery of Debts.”
In an online video, Kim explained: “If you’re using your own car for anything business-related like meeting clients, quoting for jobs or picking up materials, and you’re not claiming mileage, you’re overpaying tax, and here’s why. HMRC lets you claim 45p a mile for the first 10,000 business miles each tax year, and 25p a mile after that.
“So, if you drive 10,000 miles, that’s £4,500 you can claim as an expense in your accounts, reducing your taxable profit by the same amount. The best bit [is] you can pay yourself that money tax free.
“Just remember, trips from home to your usual place of work don’t count, as HMRC sees this as commuting, but any business journeys outside of that do. Keep a simple mileage log, or use an app like Trip Catcher, and pass it to your accountant at year end.
“So, don’t give HMRC more than you need to. Track your mileage. Claim what’s yours, because you’ve earned it.”
Numerous individuals were swift to express gratitude to Kim for the guidance, describing it as incredibly useful information to possess. For those still uncertain, there’s a straightforward explanation provided on the Government website to assist people.
It explains that you might be eligible to claim tax relief if you utilise cars, vans, motorbikes or bicycles for professional purposes. Nevertheless, this excludes journeys to and from your workplace, unless it constitutes a temporary work location.
The sum you can claim varies depending on whether you’re operating a vehicle you’ve purchased or leased using your own funds, or a vehicle owned or leased by your employer (a company vehicle). Should you qualify, you’ll be entitled to claim for the present tax year plus the four preceding tax years.
The website explains: “If you use your own vehicle or vehicles for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle. You cannot claim separately for things like fuel, electricity, vehicle tax, MOTs [and] repairs.
“To work out how much you can claim for each tax year you’ll need to keep records of the dates and mileage of your work journeys, add up the mileage for each vehicle type you’ve used for work [and] take away any amount your employer pays you towards your costs, (sometimes called a ‘mileage allowance’).
“You can claim tax relief on the money you’ve spent on fuel and electricity, for business trips in your company car. Keep records to show the actual cost of the fuel. If your employer reimburses some of the money, you can claim relief on the difference.”
The tax rates vary depending on the type of vehicle you drive and the distance you travel. You can submit your claim online, with full details available on the Government website about how to complete the process.