Car Allowance

flossie

Not sure if anyone has come across this or not. We recently took on an employee and gave them a car allowance. The employee then claimed mileage although we said this was part and parcel of the car allowance. The employee said there is a "rule" which says we have to pay him mileage on top of this allowance but for love nor money can I find that "rule" no matter what I google.

His allowance is deducted PAYE/NIC so as far as I am aware he can claim tax releif at the end of the year if he keeps a record of his mileage.

Does anyone know if the "rule" exists that we should be paying him milege on top of the allowance and am I correct in allowing PAYE/NIC deductions?

aatmember

Hi Ya

Umm we used to pay our salespeople a car allowance in return for them using their their personal cars for business, but the car allowance, like you was paid via their salaries and agreed amount each month, which was covered by the PAYE system for tax purposes.

With regards to the mileage rate on top i would have thought it was at the company's discretion.... from what i understand if the company didn't pay an employee any mileage then the employee could claim it directly from the Inland Revenue by stating the business miles travelled in a year, which would be adjusted via their tax code... i cannot for the life of me remember what the claim is called.... but in answering your question I didn't think it’s compulsory to pay anything at all…..

Psyche

No such rule, in fact there is no "rule" that you have to pay him anything! If you don't, he can claim the mileage as a deduction on his self-assessment.