So is there any profit to be made from you (with your corporate hat) being stingy on the mileage rates so that you (with your employee hat) can offset them under a different tax regime?
Case 1: Expense paid. So for every car mile driven, that's 40p which I can pay myself out of my gross pre-tax profits. Result = 40p in pocket as soon as I claim it from myself.
Case 2: Expense not paid. That means that the same 40p is in my company's taxable profits, so after corporation tax (small companies rate 20%, soon to be 21%) I get 32p in my pocket as part of the dividend after the end of the financial year. I also get to claim the 40p as a taxable expense in my next personal tax return, which means that I'd get tax relief on it. My PAYE-taxed income is currently just into the 22% band, so up to a point each mile is worth 8.8p of tax rebate - but after a while I'm likely to fall down into the 10% band (4p rebate) or even out of that altogether (no rebate).
So it's 40p now, versus 41p/36p/32p next year. Not really a win...
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Case 2: Expense not paid. That means that the same 40p is in my company's taxable profits, so after corporation tax (small companies rate 20%, soon to be 21%) I get 32p in my pocket as part of the dividend after the end of the financial year. I also get to claim the 40p as a taxable expense in my next personal tax return, which means that I'd get tax relief on it. My PAYE-taxed income is currently just into the 22% band, so up to a point each mile is worth 8.8p of tax rebate - but after a while I'm likely to fall down into the 10% band (4p rebate) or even out of that altogether (no rebate).
So it's 40p now, versus 41p/36p/32p next year. Not really a win...
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