Your tax questions answered

What will my company car cost me?

The first thing to bear in mind is that the cost to you is not the actual car benefit. For example, if your highest rate of tax is 40%, a company car benefit of £5000 will actually cost you £2000.
Please see also our Car Benefit calculator.

If I choose to use my own car for work, what costs can I claim against my tax?

H M Revenue & Customs have approved standard pence per mile rates which are deemed to cover all business expenses incurred from using your own car. The rates are 45p per mile for the first 10000 miles and 25p per mile thereafter.

Alternatively, if you are self employed you may be able to make a claim for actual expenses against your income. You should seek advice from your professional advisor who will advise which is the most beneficial option for you.

Please see our Mileage Expenses calculator for more details.

Am I required to keep records of business mileage?

Yes, you should keep an accurate record of your business mileage. Your log should include details of:

  • dates
  • destinations
  • mileage; and
  • reasons for each business trip.

If you are required to complete an expenses log for your employer this is usually acceptable.

What happens if my employer reimburses me more than I can claim under the Revenue approved rates?

In this case, you will be taxed on the excess. However, you should not have to work out the amount for yourself. Your employer must tell you the exact amount of all taxable income, including any taxable expenses payments such as these.

Now that my top rate of income tax is 50%, will I get tax relief at that rate if I make charitable donations in this tax year?

Your gift is treated as being made after 20% tax has been deducted.

So for example:

If you make a gift aid to charity of £80 the basic rate threshold is extended by the gross amount of your donation. The value of your gift to the charity will be £100. (£20 difference is claimed by the charity from HMRC)

For your £80 gift you have an extra £100 of your income taxed at 20% rather than 40%, and an extra £100 of income taxed at 40% rather than 50%. In total you have gained additional tax relief of 30% (20% +10%) on the £100 gross gift.


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