PAYE Claiming Tax Back on Business Mileage 2009

donnacha

I'd appreciate some advice on my current scenario.

I have been working for my current employer since 2004. I receive a yearly car allowance and use my personal car for all business mileage. I have always tracked my business mileage and up until Dec 2008 on a monthly basis I would supply my employer with the business mileage and my employer would pay the business mileage tax free and reduce the car allowance accordingly. Therefore I was only paying taxes on the difference.

In Jan 2009 my employer told me I would have to claim mileage back directly from the revenue going forward. When I phoned the revenue offices today I was advised that I cannot claim a mileage rate and instead I should be supplying them with my total motoring expenses for the year and a breakdown of business and personal mileage. I do not have petrol receipts for 2009 (nor for petrol for 2010 so far!). I'm wondering if the guy in the revenue office has it wrong as I don't see why my employer could pay me mileage tax free for so long and now be in a situation where I can't claim any. I drive approx 10,000 km per annum in business mileage.

maddogcollins

Revenue are correct in this from my reading of the situation.

There are a number of options available to an employer on how he deals with business use of a private car.

The below quote is taken from revenue:

"Motoring expenses

Some employees use their private cars for business purposes. Re-imbursement of motoring expenses incurred can be dealt with in various ways. Employers are reminded that round-sum motoring expenses payments are taxable in full and must be treated as pay. Please see earlier paragraph 'Round-Sum Expenses'.
Re-imbursement of Motoring Expenses by Flat-Rate Kilometric allowances

Where employees use their private cars for business purposes, re-imbursement in respect of allowable motoring expenses can be made by way of flat-rate kilometric allowances. There are two types of kilometric allowance schemes which are acceptable for tax purposes, if an employee bears all the motoring expenses:

• The prevailing schedule of Civil Service rates or
• Any other schedule with rates not greater than the Civil Service rates

Please see IT 51- Employees Motoring Expenses for full details.
Expenses claims submitted to Revenue

As an alternative to the re-imbursement by the employer an employee may submit a claim to Revenue for an expenses deduction (and any wear and tear allowance in respect of the motor vehicle). However, where the employee decides to make such a claim, any re-imbursement of expenses by the employer, including any scale allowances, must be treated as pay and taxed accordingly. Employees cannot claim from Revenue for any expenses that are or will be re-imbursed by the employer.
Information Required

• Date of purchase of car.
• Purchase price.
• Whether new/second-hand.
• Date from which car was used for business purposes.
• Mileage and percentage of business to private use.
• Running Costs - Repairs, Service, Tax and Insurance.
• Any reimbursement of running cost made by the employer

There are links to relevant information sheets and claim forms on this page
http://www.revenue.ie/en/tax/it/employee-expenses.html

As regards not having petrol receipts you wont be able to claim for anything you do not have proof of purchase for. So you may be best explaining this to your employer and come to an agreement that from now on you will claim from revenue.

Hope that helps you out a bit

donnacha

Thanks maddogcollins

Aidan64

You can claim back your business mileage expenses. You use the civil service mileage rates to calculate the total business expenses for the year. Do this out on a spreadsheet and include the date, where you travelled to, the distance of the journey and the rate allowed. Send these into your local Revenue district and request them to issue you a P21 balancing statement. Your mileage expenses will be deducted from your gross pay and you should get a refund of the tax overpaid.

There is a 6-8 week backlog in Revenue so don't expect the refund within the first 2 months of submitting the claim.

DoMyBooks

Aidan64 wrote: »

You can claim back your business mileage expenses. You use the civil service mileage rates to calculate the total business expenses for the year. Do this out on a spreadsheet and include the date, where you travelled to, the distance of the journey and the rate allowed. Send these into your local Revenue district and request them to issue you a P21 balancing statement. Your mileage expenses will be deducted from your gross pay and you should get a refund of the tax overpaid.

There is a 6-8 week backlog in Revenue so don't expect the refund within the first 2 months of submitting the claim.

I process a large number of PAYE refunds on ROS and they have all being coming through in two to three weeks.

Is the 6 to 8 weeks in relation to paper claims?

nc6000

Edit : Looks like this has made it into the wrong forum, should it be moved to Taxation?

Hi,

I found this thread on a search in Google as I have a similar query.

I too use my personal car for business and my employer pays me a car allowance which goes through payroll and is subject to PAYE etc etc. On top of this I receive a pretty small mileage rate for any business mileage I do.

One of my colleagues seems to think that I can claim a tax refund on the difference between the mileage rate I receive and the civil service rate. I've tried looking this up on revenue.ie but can't find much.

Can anyone with experience of this situation advise what refund I may be eligible for, if any?

I'm only using my personal car for business since Sept 09 so my query only really applies to the 2010 tax year.

Thanks.

barneystinson

nc6000 wrote: »

Edit : Looks like this has made it into the wrong forum, should it be moved to Taxation?

Yeah, it probably should be in taxation, but we'll plough on!

Your colleague is completely wrong. You should read maddogcollins' helpful post above, (it's the first reply to the OP) but the gist of it is this:

There are essentially 3 ways for dealing with employee motoring expenses
1) Employer pays a round sum amount, i.e. a car allowance - and this is ALWAYS taxed (as you have indicated is the case with you),
2) Employer reimburses the employee by way of a rate per mile/km, on a scale less than or equal to the applicable civil service mileage rates.
3) The employee can submit a claim directly to Revenue, based on their ACTUAL MOTORING EXPENSES incurred. (Not, as your colleague has suggested on the difference between one notional amount calculated by the employer, and another notional amount based on civil service rates...)

The Revenue info page goes on to state the various information / records which you are obliged to keep in order to validate your claim, and most significantly of all for you...

"However, where the employee decides to make such a claim, any re-imbursement of expenses by the employer, including any scale allowances, must be treated as pay and taxed accordingly. Employees cannot claim from Revenue for any expenses that are or will be re-imbursed by the employer."

So the mileage rate you've been paid tax free, becomes taxable money if you choose to make a separate claim. Therefore, if you plan to start making a separate claim each year, you'll firstly need to inform payroll that ALL of your motoring/mileage payments need to be taxed to PAYE, and you'll have to start keeping the necessary records... You'll also need to get out your pen, paper and calculator and see if it'll actually be of any benefit to you... And as regards 2010 you might be on a sticky wicket because I presume you haven't got the records you would need in order to make a claim (but then again you also didn't pay the tax on your mileage expenses paid by your employer, so you'd be creating a right old mess by revisiting it at this stage...)

Good luck.

nc6000

barneystinson wrote: »

Yeah, it probably should be in taxation, but we'll plough on!

Your colleague is completely wrong. You should read maddogcollins' helpful post above, (it's the first reply to the OP) but the gist of it is this:

There are essentially 3 ways for dealing with employee motoring expenses
1) Employer pays a round sum amount, i.e. a car allowance - and this is ALWAYS taxed (as you have indicated is the case with you),
2) Employer reimburses the employee by way of a rate per mile/km, on a scale less than or equal to the applicable civil service mileage rates.
3) The employee can submit a claim directly to Revenue, based on their ACTUAL MOTORING EXPENSES incurred. (Not, as your colleague has suggested on the difference between one notional amount calculated by the employer, and another notional amount based on civil service rates...)

The Revenue info page goes on to state the various information / records which you are obliged to keep in order to validate your claim, and most significantly of all for you...

"However, where the employee decides to make such a claim, any re-imbursement of expenses by the employer, including any scale allowances, must be treated as pay and taxed accordingly. Employees cannot claim from Revenue for any expenses that are or will be re-imbursed by the employer."

So the mileage rate you've been paid tax free, becomes taxable money if you choose to make a separate claim. Therefore, if you plan to start making a separate claim each year, you'll firstly need to inform payroll that ALL of your motoring/mileage payments need to be taxed to PAYE, and you'll have to start keeping the necessary records... You'll also need to get out your pen, paper and calculator and see if it'll actually be of any benefit to you... And as regards 2010 you might be on a sticky wicket because I presume you haven't got the records you would need in order to make a claim (but then again you also didn't pay the tax on your mileage expenses paid by your employer, so you'd be creating a right old mess by revisiting it at this stage...)

Good luck.

Thanks for taking the time to reply. I figured it sounded a bit too good to be true but thought it was worth checking out anyway.