Hi I've been thrown in the deep end with payroll - not really my thing but I've been asked to stand in for a while, I've looked through other posts and can't see anything for this. An employee gave me a mileage claim for today and said I don't need to do anything with it unless I put it through the payroll and reduce his salary?? He has informed HMRC of this and they reduced his tax code accordingly. Not sure what I have to do with it? I did put the car details onto sage any help would be gratefully appreciated.
Mileage allowance payments are usually paid for private cars used partly for business purposes. The current approved rate is 45p per mile up to 10,000 miles and 25p per mile after this. Unless the rate paid is in excess of the approved rate then no tax or ni is payable and they can be paid through the payroll in full (without deducting tax or ni) and should be entered as a separate item.
If it's a Company car then the rules are different and the benefit will have to be reported on a P11D at year end and Class 1A ni contributions will be due on it.
Hi Beverley. You can record the mileage on Sage, but not sure if actual mileage comes into it if it is a Company car. Take a look at this helpsheet for employees regarding Company cars. The reason the employee's tax code has been adjusted is because this car was reported last year on a P11d and presumably will have to be reported at the end of this year in the same way.
