Mileage

UK PROFESSIONAL DRIVERS FORUMS THE UK PROFESSIONAL DRIVERS FORUM (INTERACTIVE)
1

Good Morning Folks :slight_smile:

I’m working for agency and aware of the tax allowances, however I still have a question. My round trip to work (at the moment, and likely for the foreseeable) is 120 miles, 600 miles a week.

I am registered as a sole trader, but in a different profession, so this driving job is classed by the revenue as a second job and as such attracts the BR tax code, therefore removing my tax free allowance on income earned in this second job.

Anyway, how does the allowance work once you have already paid tax through PAYE? Do you apply for a rebate at the end of the tax year? At the moment I have calculated the following.

Gross weekly pay £370 (ish)
LESS
Mileage £270 (up to 10,000 miles, then £150 a week)
Meals £50 (normally, but at least £25)

Does this mean my taxable income after a weeks work is £50?

Help please :slight_smile:

2

If I couldn’t find a job nearer than 60 miles away then I think I would change careers a bit quick…

3

The form you would normally use to claim the expanses if you are PAYE is P87, but as you are already registered as a sole trader you will be completing a full tax return each year anyway and there is a ‘second employment’ section in that which also covers claiming of expenses so it may be simpler to stick to using that method. However, be a bit careful because if you are doing the round trip ‘for the foreseeable future’ then the taxman may consider that the location is regarded as your permanent place of work and will start poking his nose in. Also, if you appear to be doing the driving work full time, it doesn’t leave a lot of time for your own ‘main’ employment - it could get sticky for things like the WTD.

4

jonesy1985:
Good Morning Folks :slight_smile:

I’m working for agency and aware of the tax allowances, however I still have a question. My round trip to work (at the moment, and likely for the foreseeable) is 120 miles, 600 miles a week.

I am registered as a sole trader, but in a different profession, so this driving job is classed by the revenue as a second job and as such attracts the BR tax code, therefore removing my tax free allowance on income earned in this second job.

Anyway, how does the allowance work once you have already paid tax through PAYE? Do you apply for a rebate at the end of the tax year? At the moment I have calculated the following.

Gross weekly pay £370 (ish)
LESS
Mileage £270 (up to 10,000 miles, then £150 a week)
Meals £50 (normally, but at least £25)

Does this mean my taxable income after a weeks work is £50?

Help please :slight_smile:

You’re doing it the wrong way round. This is actually your MAIN job for the purposes of PAYE if you’re a sole trader in your other. Although you’ll end up paying the same amount of tax overall you’re kind of shooting yourself in the foot however only by no more than around £40 per week until you submit your tax return so its up to you whether to decide to change things around…

Anyhow because you’re self employed as well you would NOT claim via a P87 as tallyman correctly says. Instead what you would do is sort it all out by the self assessment form you complete. In the self assessment form is a section for PAYE employment. You put in the gross pay, any expenses which will be these you’re claiming, the amount of tax you’ve paid. What happens is the profit/loss from the self employment and the income less tax deductible expenses from PAYE are added together and the tax bill is calculated. From that calculation the amount of tax you’ve paid through PAYE is deducted and you’re sent a bill for the outstanding balance or a refund if its a negative unless you choose to offset the loss either forward or backwards.

If you would like an example to clarify this I can post one if you request.

You need to keep a record of the mileage as you would for your self employment. You can claim a daily meal allowance. You can claim £5 if you’re away from your normal place of work for 5hrs or £10 if you’re away for 10hrs or more and £15 if you finish after 8pm and buy a meal you’d normally have at home HOWEVER YOU CAN ONLY CLAIM THAT IF YOU’VE ACTUALLY INCURRED THE COST OF A MEAL so would therefore need to have receipts. You can’t claim it if you don’t buy a meal or take a packed lunch.

More info about meals here:
hmrc.gov.uk/briefs/income-tax/brief2409.htm

Other than that there’s nothing wrong with the maths.

If you’re on income related benefits, your income for those is the amount after tax deductible expenses. I know a lot of people will look at those figures and think it can’t be right you can claim that much but its spot on.

I DO HOWEVER HAVE TWO MAJOR CONCERNS

  1. Given you’re claiming most of your wages as tax deductible expenses, only claim £5 for the meals you actually pay for and have a receipt for as you’re more likely than most to be asked to provide proof of expenses.

  2. The mileage. If this is the only job you end up doing for the agency and you’re not required to go to the agency office first in a normal day HMRC could decide to class it as normal commuting and therefore it would not be a tax deductible expense. I would still claim it but depending on the level of profit/loss from self employment I would also put aside 20% of the total amount you’re claiming in a savings account so if they do declare it as normal commuting you can write a cheque for the bill they send you. For most agency workers its not a concern as they will go to several companies during the course of a year but your post makes it sound like this is the only place you’ll be going to and if that’s the case the rules of the game change.

5

Many thanks for the detailed responses.

My situation exists because

  1. I’m a new driver and took the first opportunity I could get, which was in Bristol
  2. I need (or rather want) experience of driving class 2 then class 1 before purchasing a vehicle and operating it as part of my main business affairs. It is likely that I will continue to commute to Bristol for driving work because there is plenty of work to choose from, but by no means do I intend to continue to work for the same place I have been for the past 2 weeks. I will continue to live where I am because my business is based here, and contractors/employees are all here too.

Ok, so if this is indeed my main job does a simple conversation with the local tax office resolve this problem? Simplicity is the key :wink: I know it will all work out in the wash!

So it seems that I will just go about recording my expenses in the same way as I would do normally and then work it all out at the end of the tax year. There is no way I can submit a form monthly or quarterly?

6

If you have employees/contractors then I would suggest you have a word with your accountant and ask him/her to sort it out for you - they’re in the best position to advise, especially if you are eventually planning to incorporate your driving into your main business. The tax office can be helpful but it really depends on whether you speak to someone who knows what they are on about, and no, the taxman doesn’t deal in anything other than annual returns.

7

jonesy1985:
So it seems that I will just go about recording my expenses in the same way as I would do normally and then work it all out at the end of the tax year. There is no way I can submit a form monthly or quarterly?

Correct, you can only do it at the end of the year. Its a shame your existing business isn’t a Limited Company. You could then work for the agency and invoice them. Whilst they should let you do it sole trader, because they know they’re pushing a very grey area of the tax law they prefer people self employed working via them to be Ltd Company or to use an Umbrella Company to cover their backsides.

I can’t recall how you change things over in regards to your main/secondary employment for PAYE but in this respect the local tax office are usually quite helpful. It’ll help if you have the PAYE reference of the agency.

I’m with tallyman though, I think I’d be talking to your accountant to find out the best tax efficient way to do this.

8

I will have a conversation with the accountant. But they confess to not being real experts in road haulage, and there are always wise words to be had on here.

I think I will be changing over to ltd status this year, quite a few things are pointing me in that direction and it throws up a few more options and investment opportunities for shareholders bla bla bla.

Anyway, thanks Connor. :smiley: