How to I claim the 20p a mile allowance from HMRC?

davmaggs

I read an article quite a long time ago that said that the Inland Revenue has a mileage allowance for bicycle journies (20p a mile) as an alternative to company car rates. I looked it up and it is on their web site, and I've been itching to put a claim in.

Well, I've finally managed to cycle to a client and I'd dearly love to get something back from the HMRC even if the stamp costs more (it'll be my only work related bike journey in 08/09 tax year).

Does anyone know the practicalities of claiming this?

Is there some kind of form/process that you have to do or is it really a rate that your employer is allowed to pay and it's not really HMRC who stumps up?

FyPunK

Not sure how if your self employed etc, I do visit patients and cycle to our other practice and put my claim through to my employer as travel.

wgwarburton

My understanding is that it's an HMRC recognised figure that your employer can use without needing to justify it to them (or to you, effectively).

So, if your employer has a policy of paying mileage allowances/expenses for use of a vehicle on business, you ought to be able to claim this from them, and they in turn would declare it as business expenditure to the taxman.

If you are self-employed, you have more control over what expenses are "allowable".

So, when you put in your expenses claim for the month, you include 20p/mile for business mileage using your own bike.

It isn't HMRC that stumps up, but your employer does get a tax break from them if the paperwork is in place, and you get your cycling costs offset. The hassle factor may depend on HR, you might get some grief about insurance and company risk exposure and them getting sued if you have an accident etc, or they might just blink once and put it through!!

Cheers,
W.

the_hundredth_idiot

I think there is a slight addition to WGW's post - based on my previous employer's approach to reimbursement for car mileage.

The Government allows an employer to reimburse employees by up to 20 ppm for use of a cycle on business because 20 ppm is seen as a reasonable cost of using a cycle. If your employer paid you more than that, the excess could be counted as taxable income rather than reimbursement of a business expense.

However, if your employer pays you less then you can claim back the "lost" tax relief on the excess. Effectively, it's saying that some of your taxed income was actually being used to pay for a business expense and so you should have tax relief on that income. Makes sense!

My previous employer used to pay a car mileage allowance of 13 ppm whereas HMRC allows you reimbursement of up to 40 ppm (up to 2,500 miles pa, I think it is). So we'd claim back the excess on our tax returns - my firm gave us instructions on how to do it.

I can't see why you wouldn't be able to use the same approach for cycle mileage, although it's probably not worth the hassle unless you do quite a few miles.

I could probably do a numerical example if you were interested.

Bassjunkieuk

I'm in the process of actually making a claim for the past year at the moment. I heard about this last year and grabbed the form off the HMRC site (google P87) and after making a rought guesstimate and sending it off I was (un-surprisingly) told I couldn't claim at the time as I didn't have enough evidence of where I was working and they also noticed my employer hadn't made any contribution.

For the past year I have been keeping records of where I'm working (just using the calender in Outlook) and setup a spreadsheet to track how many days each month I visit each site.
I've also obtained a letter from my HR department to confirm they don't pay towards my cycle based travel. Once I get round to it I'm going to knock up a quick list of the work place addresses and send off another claim for this year! I'm hoping it goes through as my claim is for just over 3000 miles :-)

I'm not to sure how the money is re-reimbursed tho, would my tax code change or do I just get a nice big fat cheque? I'm obviously hoping for the latter!

graeme_s-2

My employer pay cycle mileage at the HMRC endorsed rate. A couple of years ago I did a 2 day course in Leamington Spa, and clocked up 40-odd miles cycling there and back. I put a claim in using my employer's standard mileage form (which I had to modify slightly to make it relevant to cycling miles), and got £8 (or whatever it came to) tax free in my next pay packet. It was no problem at all.

One thing I have noticed (although it's never affected me) is if you're using a cycle2work bike and you're still paying for it, you can't claim cycle mileage on it as your employer owns the bike at that point. Seems fair enough, but worth keeping in mind!

the_hundredth_idiot

Bassjunkieuk wrote:

I'm not to sure how the money is re-reimbursed tho, would my tax code change or do I just get a nice big fat cheque? I'm obviously hoping for the latter!

30,000 miles is probably worth it! That'd be around £120 as a 20% tax payer or £240 as a 40% tax payer.

Don't they usually reimburse for amounts less than £1k by adjusting your tax code? Or can you just ask for a big fat cheque instead?

davmaggs

excellent advice. I've got a copy of form p87 via google.

As I'm at a small firm I sort out a lot of my own paperwork, so I will go for a claim directly from HMRC. The vast majority of my meetings aren't suitable for bike commuting, so it was only recently I made a point of doing it for a business errand as that one didn't require turning up in a suit.

what I will do is start running a diary for 2009/10 of bike mileage, and then decide on the time/effort cost of putting in for it. Form p87 looks simple enough. Plus it gives me an excuse to try and get some miles in during the day.

spen666

The Hundredth Idiot wrote:

...
My previous employer used to pay a car mileage allowance of 13 ppm ...

All you said in your post is correct IMHO


However, if my employer was only offering 13ppm, then I would not be using my car for business use -end of.