business mileage refund

Does anyone know, if you have business mileage (at 40p/mile up to 10K miles and 25p/mile after that) and your company does not give you anything towards it and you do your tax return, are you entitled to the full amount rebated to you?  Or is that amount simply subtracted from the taxable income you have?

Let's say you do 12K business miles, you're eligible for £4500 (10000 * £0.40 = £4000 + 2000 * £0.25 = £500) in mileage relief.  Does the gov't give you a refund of £4500 or is that £4500 subtracted from your total taxable income and a portion of that £4500 is refunded to you?

I ask because self assessment seems to be telling me the later, however, where I used to work they would directly credit my account with the miles * £0.40 or £0.25 as appropriate so I would be paid the full mileage relief amount into my bank account.

Any clarification on this would be much appreciated!

Thanks.

My accountant says that it is 'tax relief', so not a lump sum returned to you.

Guya is more of an expert on this topic than I am, so he will correct me if I have it wrong.

1)  You can not include ANY commuting.  The first trip of the day to the location you will be working and the last trip of the day to go home do not count.  If you are working from home, your first and last trip may not count as commuting; it depends on how "commuting-like" these trips are.  You would need to ask a specialist in this area to make sure.

2)  Each trip must be necessary for business.  For example, was it really necessary to drive out to see Client Whosis in September, or could you have handled everything by fax, telephone, etc.?  Was this trip actually commuting rather than a separate business trip?  And if it WAS really necessary, why did your employer not reimburse you for the cost?  If you're self-employed, why did you not bill the client for the trip?  You would have to justify your position to the Inland Revenue on these points, as well as have proof of your mileage, the business nature of the trip, who you met with, and so forth in the event this item is selected for an inquiry.
 
3)  If your employer does not reimburse you, you take a claim as a deduction against your income.  This reduces your taxable income; it does not reduce your tax directly.  Thus, driving 2500 miles x .40/mile = £1,000 deduction.  In this example, if you are in the 40% bracket, this saves you £400.  If you are in the 22% bracket, you save £220.  Your former employer may have made internal adjustments which pushed the allowance up or down on your paycheque; these would not apply to you in your current situation.

Lizzit,
I have a feeling what you mention is point 3 about my former employer must be true.  Even though they paid me the 40p/mile directly they must have taken more tax out of my monthly paycheck - it's difficult to know as it is not clearly delineated on my payslips.

I'm not self employed but make temporary work engagements anywhere from a few weeks to to many months at clients so they are considered temporarly workplaces.  As I understand from HMRC and other colleagues you can technically be somewhere up to 2 years before you are classed as being "permanent" there.

The tax relief you mention, Cait, must be true, that it's not a refund.  It's funny, because if you're in the 40% bracket you claim 40% of your miles and then get relief of 40% of that which in some strange way seems a little confusing.

Guya knows more about whether traveling to a temp work location meets the definition of commuting than I do.  Guya, comment?