Claiming Home Care Worker Mileage Allowance Relief
As a Homecare worker, if you are using your own car for work purposes then you are more than likely eligible to claim Home Care Worker Mileage Allowance Relief from the Inland Revenue.
What is Mileage Allowance Relief?
Mileage Allowance Relief works by increasing the amount of income you can earn before you start having to pay tax. The current HMRC approved Mileage Allowance Rate for cars is 45 pence per mile but you will need to deduct from this amount any mileage contribution payments that your employer makes to you. So, if your employer contributes 20 pence per mile (by the way we currently pay 40 pence per mile) you may only make a claim for relief on the balance, i.e. 25 pence, from HMRC.
When you claim relief you are not claiming the amount in full but an entitlement to not pay any income tax on that amount. This means that if you drive 10,000 miles per year for your work and you are claiming the full 45 pence allowance (i.e. you do not receive any mileage contribution from your employer) your Personal Allowance will increase by £4,500. In the tax year 2017/18 the Personal Allowance Rate has been set at £11,500 which means you can usually earn up to £11,500 before having to pay any income tax. Continuing our example, by adding on your Mileage Allowance Relief of £4,500 you would now be eligible to earn £16,000 before having to start paying any income tax.
How do I qualify for Mileage Allowance Relief?
There are a number of factors that you need to be aware of that will determine the final value of your allowance entitlement and these are as follows:
- You can claim Mileage Allowance Relief on any journey that is work related. For example, to visit your clients in their own homes. You cannot claim Mileage Allowance Relief on your ‘commute’ i.e to and from your own home.
- You need to deduct any mileage payments you receive from your employer. So, if, for example, you receive a 20p per mile contribution from your employer you may only claim Mileage Allowance Relief on the balance i.e. 25 pence per mile.
- The 45 pence per mile rate applies only to the first 10,000 miles. In excess of this the maximum rate claimable is 25 pence. So, if you are claiming for say 12,000 miles and you do not receive any contribution from your employer, you may claim up to 45 pence for the first 10,000 miles and then 25 pence for the remaining 2,000 miles.
- The 45p Mileage Allowance Relief entitlement is for using your car. You are also entitled to claim an additional 5 pence for transporting a passenger. The rates for using a motor bike or bicycle are less (24 pence and 20 pence respectively).
Calculating your MAR entitlement:
Let’s take a typical example of a Homecare Worker earning in excess of £16,000 per annum who drives 12,000 miles each year on work related journeys. She currently receives a 20 pence per mile contribution from her employer.
The Mileage Allowance Relief Calculation would be as follows:
Annual Mileage of 12,000 miles:
10,000 miles @ 25 pence (45 pence less 20 pence employer contribution) = £2,500
2,000 miles @ 5 pence (25 pence less 20 pence employer contribution) = £ 100
Total Mileage Allowance Relief = £2,600 (£2,500 + £100)
This means that she can earn an additional £2,600 each year before having to pay any income tax. As a 20% tax payer this is therefore worth £520 per year (£2,600 @ 20%). This is in addition to the contribution payments of £2,400 (12,000 miles @ 20p per mile) she also receives from her employer.
You can submit a claim going back a maximum of four years. So if you’re eligible and you’ve never claimed Mileage Allowance Relief before you might be owed a significant sum. Claims above £2,500 for any single tax year need to be declared on a Self Assessment tax return alongside all other income but claims below this amount can be submitted independently without the need for a tax return. You can make the claim yourself or use any one of the numerous reclaim services that will do it for you for a fee.
In order to make a claim you will need an accurate record of your mileage and your pay slips covering the period for which you are claiming. Day to Day Care Home Care Workers using electronic care monitoring to log-in and out of their care calls can obtain this information directly from the office.
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