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06 May, 2012

I am about to start a new job for which I can choose a company car or car allowance, also I can be PAYE or self employed. I could choose a company Prius with low BIK payments, they will pay an additional per mileage amount to cover fuel, or I thought of leasing a double cab pick up. I believe I can claim tax relief on the lease payments but do I need to be self employed to do this or is it allowed for PAYE, and does it also apply if I am paid a car allowance. Also, can I claim the difference between the 45p/20p mileage rate against tax if I am paid a car allowance. I will be a 40% tax payer.

Hi Martin Firstly, yes you would need to be self employed to claim the lease rentals against tax. If you are paid a car allowance and are employed, this will be treated as normal salary for Tax and NI purposes. If you are employed, the current tax free limits for mileage reimbursement under the AMAP (Authorised Mileage Allowance Payment) scheme are 45PPM and 25PPM. If you are paid at a lower rate than these, yes you can claim the difference against your taxable income. For example, if you do 10,000 miles and are paid 25PPM, your are 20PPP X 10,000 under the limit. This equates to £2,000 which you can offset against your salary. So in other words you don't pay tax on £2,000 of salary in addition to your personal allowance (currently £8,105). Finally, if you are self employed and are paid either a car allowance or mileage (or both), this is treated as normal business income in addition to whatever you charge for doing the job/s. Then you can either run the vehicle in your 'self employed' name, or run it personally and the business can pay you a mileage allowance for all business miles. Hope that helps. Andy

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About Andy

Andy has worked in the motor trade and more specifically been involved in supplying finance for vehicles, coming up to 20 years. He started his own business www.autorama.co.uk in 2004 selling used vehicles before expanding the company via its comercial vehcle leasing business in 2006. Back then the leasing business was pretty much just him, a laptop and a portakabin. Now just six years later Autorama through it's online brands vanarama.co.uk and pickuptrucksdirect.co.uk is recognised as the largest independant commercial vehicle leasing broker in the UK.

The last six years have seen continued growth and resulted in the company now employing 32 staff. Being able to offer some of the most competative rates in the country as well as industry leading levels of customer service have played a big part in our growth. However it is our ability and moreover our expert knowledge in this sector that has allowed us to best advise and therefor better serve our customers.

Every customers needs are different and there are so many options available that it's easy to see why people get confused by either inaccurate or simply poor advice. We are here to help and advise you so whatever your query, no matter how big or small your business or how complicated your situation seems. let us answer your van leasing questions.

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