Vehicle Tax Relief - Urban Myth or True

Discussion in 'Finance, Property, Law' started by PoisonDwarf, Jul 2, 2008.

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  1. A little birdie told me that serving members of the forces are entitled to tax relief on journeys that we make for duty purposes. The rationale behind this is (apparently) the fact that the governmental rate of fuel allowance is something like 40p per mile whereas we only get paid something like 8p per mile when we claim MMA or GYH etc. Because we are all on short tours, the taxman considers daily or weekend commuting reasonable expense. So the story goes that we can claim tax back to the equivalent of the different between the two sums. A bit convoluted I know.

    So, for example, if I commute 100 miles a day and get GYH(P) of roughly 8p per mile, they give me £8. An MP or civil servant would get £40 (40p x 100 miles). And so I could claim reasonable tax refund of £32, based on the fact that I am a public servant on temporary duty (or something like that). Those figures sound a bit mental but the chap I spoke to is now the proud possessor of a tax code with 4 digits rather than my piddling 500-odd one.

    Does anyone know any more about this? I promise this chap wasn't a Nigerian scammer!
  2. PD,

    Bits of that are true... and it all depends on how much research and effort you want to put into this! This applies to all taxpayers, but HMRC doesn't tell you that.

    :arrow: An MEP receives 91p/mile (and if he's in Brussels, shouldn't that be per km...?). Source: Sunday Times
    :arrow: An MP receives 40p/mile. Source: Sunday Times
    :arrow: HMRC reckons 40p/mile is the amount that does not attract any further liability to tax and this hasn't budged for some years. For people who are paid less, there is the possibility that they can reclaim the tax paid on the difference.
    :arrow: We get nowhere near that, although there are various rates depending on what we are doing. IIRC the maximum rate is about 24.6p/mile at the moment.

    In principle, if you are paid by the MOD to use your own car to travel to a task, then the MOD will pay you at about 24p/mile. At the end of the tax-year, you can claim back the tax that you paid on the difference between the official HMRC rate and the military rate. So, you could currently claim back 20 or 40% of 40-24p/mile. That would be 3.2p or 6.4p/mile.

    Now, I understood that this was solely for work purposes; attending a training course or a hospital appointment doesn't count. Don't ask me why; those are the HMRC rules as I understand them (and they challenged me a few years ago). I doubt that you can claim for journeys to and from your residence, as everything that HMRC does is designed to stop that. However, I am open to persuasion by other Arrsers.

    The normal rules apply; keep all the paperwork for 6 years. That is somewhat easier now that JPA has kicked in and forced us into good record keeping :D ! Then it is all down to how your Tax Office does the work; I have found Cardiff to be reasonably well informed on most things but they can be very ignorant when away from their area of expertise.

    As an aside, I find it a real balls-ache that JPA and the audit system insists on exact mileages for duty journeys but then DII/F stops us using the maps on and So, how the **** am I supposed to work out the mileage then? I have just been audited for a claim of £15 (£15 FFS, how much did the audit cost?) where much of the discussion was based on how many miles I had travelled. I won but someone lower than LCpl would have had a very rough ride - and that is very wrong!

  3. Cheers Litotes. I'm going to do a bit more digging.
  4. The mma claims system on JPA is purposely difficult to understand through design. I have sat down with clerks trying to work out the best way to claim and even they get annoyed by it.

    I believe the system is designed to be difficult to save money from prospective claimants. I went to a unit the other week and there are only four terminals for the lads to get access on.


    Funny enough I keep all my fuel reciepts out of habit so if there is a way to claim the tax back I will be in there like a shot.

    Good post


  5. You don't need to keep your fuel receipts (other than when filling hire cars, which is another matter altogether, and should be avoided if at all possible). We are paid at a flat rate (which varies, as I have explained, depending on what you were doing; JPA shows a drop-down list of rates)!

    I will see if I can find my tax information and post it on here.

  6. Cheers Mate!

  7. WITHOUT PREJUDICE ('cos I'm not an accountant, but this is how it has been explained to me and I could be wrong)

    Starting from a civvy perspective (and the Army system shouldn't be majorly different):

    My understanding is that the tax relief on journeys from home to work only applies if you're going to somewhere which isn't your regular place of work. So, if I were based in the office, I would pay tax on my mileage payments as they would be seen as a "benefit in kind."

    Fortunately, my contract says that I'm home-based and, furthermore, that I carry out my work in different places i.e. I don't have a fixed workplace. I still get tax relief when I go to the office because it's not a regular journey. At 40p/mile - the HMRC limit - my mileage payments are free of tax.

    Putting this into the Army's perspective, this means that routine journeys from home to work don't qualify for tax relief. If you're on a short course (and short would be measured in days, rather than weeks - but there isn't a stipulated period, as far as I'm aware), then you probably should get relief.

    Even with short intervals between tours and courses, I doubt that these would be short enough to cause your place of work to be considered temporary.

    The other issue is that if you were to make a claim, it wouldn't be for the difference between the Army rate and the HMRC rate. (The HMRC rate is the point at which they deduct tax, not what they are authorising MoD to pay you). It would be for the tax that you paid on the rate that you received. So if your mileage payment were grouped with your salary and the whole amount taxed, then you'd be claiming back the 20% of your 8p/mile (or whatever it is), not 20% of 32p/mile. HMRC aren't in the business of paying back more than has been paid to them. If your 8p/mile is paid to you untaxed, then you have no tax to claim back.

    The question is, do you pay tax on your 8p/mile for your regular journeys (which probably don't merit tax relief)? I suspect not, so rather than you hounding HMRC for money, they could just turn the tables and ask for the money that you owe them!
  8. not sure if i am missing the point here, but just to (possibly) confuse matters even further...

    one of my Cpls was commuting a long distance every day to work and back, but only allowed (under the old system) to claim i think 19 miles either way(? sound about right?).

    anyway i spoke to the admin office and he spoke to HMRC. at the end of the financial year he was allowed to claim tax relief ONLY FOR THE AMOUNT OF MILES FOR WHICH HE HAD NOT ALREADY BEEN COMPENSATED BY THE ARMY.

    so each day, say 50 miles each way. 19 miles - MMA / home to duty travel. 31 miles he could claim back the tax paid. and the same for the return journey. so 5 days a week x 62 miles = about 300 miles a working week.

    think he got back about £8-900 at the end of the year.

    i think under JPA it is more generous and he can claim the first 50 miles or something? so hardly any benefit any more.

    i stand by to be shot down by the legal experts, because i've probably got some salient fact wrong. but he looked into it and got money back from the taxman at the end of the year. (and i seem to recall that i initially tipped him off to the possibility, after reading something on arrse...?)
  9. Reference my last:

    I've looked on the HMRC website and found that you can indeed claim the tax relief for the difference between 8p/mile and 40p/mile. (Embarrassing climbdown!) So there could be some big money to be made.


    Commuting journeys don't attract tax relief (at all). So it still stands that not only would you not be able to claim money back from HMRC, but you could be liable to pay tax on the mileage payments that you've already received. The biggy question here is "Does the Army tax MMA at source or is it paid untaxed?"

    If it's paid untaxed, then keep quiet, cross your fingers and start saving.

    Having said that, it's also possible that MoD has made separate negotiations with HMRC. I hope so, because otherwise a bigger can of worms gets opened - Rail Warrants for non-duty journeys being considered as a "benefit in kind", for instance.

    HMRC reference:
  10. From JSP 752:

    04.0602. Income Tax and National Insurance Contributions (NICs). In
    accordance with ITEPA 2003 Sections 337 to 339 MMA is non-taxable. In accordance
    with HM Revenue and Customs regulations, payment of MMA at Official Duty Rate
    (ODR) can only be made for duty travel up to 10,000 miles in any single tax year. Any
    duty mileage claimed over this limit can only be paid at the ODR ‘Over 10,000 miles’
    rate regardless of the reasons for using the private motor vehicle. There is no limit on
    the number of miles a Service person may claim at MMA at Private Car Rate (PCR) in
    each tax year.

    What is claimable is tax relief on the difference between what you are paid by the army, currently 28.3p per mile, and 40p per mile. The relief is given at your highest tax liability so higher rate taxpayers will be entitled to 40% of the difference between the 2 so 40-28.3= 11.7 x 40% = 4.68 so if you have claimed PCR on 1000 miles you will be entitled to a refund of £46.80. A lower rate tax payer would get relief at 20% which would equate to £23.40 per 1000 miles @ PCR at current rates. These claims, as posted above are not admissible for normal journeys to and from work although there is some debate on the temporary nature of "assignments". Also there is no entitlement to claim this relief for medical journeys, bit of a pain when you are registered with a doctor round the corner but have to go to the med centre 35 miles away!!

    Up until the advent of JPA my FSA kept a record of all qualifying claims for all members of the unit then pushed this out at the end of the tax year along with a "suggested letter layout" to be sent to the taxman - just required a signature & copy of P60. This can no longer be done as there we are not privvy to the required information on claims submitted on JPA at unit level - progress I suppose.

    Litotes - have a word with your DII authorised demander and ask for MS Autoroute to be added to your profile - justification is that this is the official method of calculating mileages for claims!

  11. Bloody hell, it looks like I've opened up a can of worms. Brilliant!

    The argument I heard was that if you are commuting somewhere for 2 years or less then HMRC treat you as if it is indeed a temporary workplace. On the basis that most of us are posted every 2 years we fall into that bracket.

    Fingers crossed!
  12. Armadillo,

    I don't understand your problems with iexpenses the system is simple to use once you know what you are doing with it (probably the best part of JPA) - your HR Admin Staff (clerks are history) should be able to guide you, if they don't know how to use it they need to look at the business process guides and/or seek advice from their functional chain of command!

  13. PoisonDwarf - good luck to you. HMRC laid into one of the blokes at work because an audit check showed him as having been at the office for a continuous three weeks. He got out of it only because he was able to show that on some of the days he was heading towards a site and the job was cancelled while he was driving.

    The terms "permanent" and "temporary" don't come into the criteria.

    The reference is "usual," so the implication is that the tax relief applies only for "unusual" journeys i.e. not the same journey made for several consecutive days.
  14. Thanks, Paywog. I didn't even know it was available!

  15. Poison Dwarf - I have successfully claimed the difference in tax relief and back dated it over a number of years (seem to remember going back to '99) Your draft (posting) needs to have been for less than 2 years and then you can claim. I received just over 2k, I know of lots of RMs who have received more. I have a copy of the forms I have used if you want them, if someone can advise me how to post them on here happy to do so I'll just need to remove my personal details. My advice is so long as you are honest and don't claim those days you were deployed for more than 11 days i.e. GYH stopped and LSSA started the tax office are pretty much onside. Good luck.