Do you actually make anything on mileage?

[Bluebird]

If you pay yourself milage you get 40p per mile.

If you don't - you still have to do the miles, but then you take that money as either dividend or salary - both of which are taxed.#

So I don't see how you could be worse off, unless of course you walked to work - the you wouldn't have to incur any motoring costs.

I guess the question is, does 40p per mile reimbuse you for your motoring costs to the extent that your travel to work is free ? The answer to that is no.

But then apart from MPs and British Rail staff - who does get to work free ?

[Hiram King Of Tyre]

My point is this:

I really can’t see how it can cost in unless you’re driving an old banger and are lucky with breakdowns etc

Let’s take an average car. Assume the following 40 mpg and £1 per litre (to keep calcs simple) and 50,000 miles over 3 years

Fuel costs: £5687.50
Insurance: £1200.00
Servicing: £1200.00
Tyres etc: £300.00
Breakdown Ins: £300.00
Depreciation: £4000.00

TOTAL: £12,687.50


Allowance:

30,000 @ 40p: £12,000
20,000 @ 25p: £5,000
Total: £17,000

Tax saving compared with taking £17,000 as PAYE @ 40p: £6,800


TOTAL LOSS: £5887.50

I know that some of the tyres servicing, depreciation etc would be of personal benefit but only say 5-10%. At the end of the day though, I am still nearly £6k out of pocket (on a net basis). I agree that you may have to travel to allow your business to operate but at the end of the day you are only in pocket if you are an employee of the company who wouldn’t have the option of taking an extra £17k as salary

Am I missing something?

[Hiram King Of Tyre]

If you pay yourself milage you get 40p per mile.

If you don't - you still have to do the miles, but then you take that money as either dividend or salary - both of which are taxed.#

So I don't see how you could be worse off, unless of course you walked to work - the you wouldn't have to incur any motoring costs.

I guess the question is, does 40p per mile reimbuse you for your motoring costs to the extent that your travel to work is free ? The answer to that is no.

But then apart from MPs and British Rail staff - who does get to work free ?

I agree with what you say but my point is that it's no money spinner. At the end of the day, you personally are better off the less miles you do.

[DimPrawn]

I agree with what you say but my point is that it's no money spinner. At the end of the day, you personally are better off the less miles you do.

Yes. The only "winners" are those driving a £600 Vectra who does not service it, and where the depreciation is zero.

For those driving a brand new SL 55 AMG, you have lost before you even turn a wheel.

[Hiram King Of Tyre]

Right but they are the 2 extremes.

My point is that to drive an average car that you can rely on (say £4k depreciation over 3yrs/50k miles) you are out of pocket.

That dirty smelly pick-up truck is looking more and more viable (while the loophole's open!

[rootsnall]

Right but they are the 2 extremes.

My point is that to drive an average car that you can rely on (say £4k depreciation over 3yrs/50k miles) you are out of pocket.

That dirty smelly pick-up truck is looking more and more viable (while the loophole's open!

The Dim one has already put you onto the right model, the £600 quid Vectra. Just about good enough for getting to work and back but also perfect for leaving in B&B carparks, down the pub for a week or two, and for building work and dump runs.

[Hiram King Of Tyre]

Yes but is it reliable enough to do 15k miles/year?

[Bluebird]

I agree with what you say but my point is that it's no money spinner. At the end of the day, you personally are better off the less miles you do.

In your figures some of the things you mention still apply if you run a car.

Given the option I guess the best thing is to use other public transport - then the full cost of travel comes out of the business before taxation, and there are no other attached costs such as servicing mot etc.

I drive a 2000 Peugeot 306, it does the job and is cheap to maintain.

[rootsnall]

Yes but is it reliable enough to do 15k miles/year?

My current one has never had a problem and is doing 400-450 miles a week. Until they start getting over 100K on the clock I don't think they are any more unreliable than a brand new car these days. The downside is mine looks carp. You need your other half to have something half decent if you practice bangernomics and have some shame.

[Archangel]

Right but they are the 2 extremes.

My point is that to drive an average car that you can rely on (say £4k depreciation over 3yrs/50k miles) you are out of pocket.

That dirty smelly pick-up truck is looking more and more viable (while the loophole's open!

I don't understand your logic.

I have a car, I drive to work at client site in the car.

I can either fund this out of taxed income, or out of the 40p a mile allowance, where does the "out of pocket" come into it? You will always be out of pocket, just with the allowance you are out of pocket less (16p a mile).