Welcome to the third and final instalment of our August Tax Q&A from Harnett Accountants Wimbledon. Please contact us through our website with your question to have it appear in next months tax Q&A! Also you can follow us on Twitter, Facebook and Google+. Additionally, you can keep reading our daily blogs.
Q. Until 31 May 2011 I was employed as loss adjuster for company A, and I drove 4,400 business miles in my own car for that company in 2011/12. I then joined rival company B, and drove a further 8,080 miles on business, also in my own car, by 5 April 2012. Both companies paid me 40p per mile for those business journeys. Can I claim anything extra on my tax return?
A. Yes. The approved tax free mileage rate for 2011/12 was 45p per mile, for the first 10,000 business miles. However, this mileage threshold applies per employment. As you held two jobs with completely separate employers in the year, and drove less than 10,000 miles in each job, all your business mileage can be claimed at 45p per mile. You can claim £624 (5p x 12480 miles) on your tax return for 2011/12.
Q. The company provides the sales reps with pay-as-you-go mobile phones, who purchase top-ups when they need them, claiming the cost back on expenses. Does the cost of the top-ups need to be included on the forms P11D for those employees? Does it make a difference if the employee bought the pay-as-you-go phone?
A. Where the mobile phone is owned by the company and the contract is between the company and the telecoms provider, any top-ups purchased for that phone are tax free, as the provision of the phone is tax free. The cost of the vouchers does not have to be reported on the form P11D for each employee. Note this tax free treatment only applies to one phone per employee.
If the phone was bought by, and thus owned by the employee, the top-up vouchers are taxable and need to be reported on the form P11D. The employee could claim a deduction on their tax return for the cost of business calls made with the top-up payments, but this would involve analysing all the calls made into business and non-business calls.
Harnett Accountants Wimbledon
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