InkedMuttley wrote:
or you can carry on charging that price but you will then have to pay tax on every £1 earned.
Oh yeah, really?
Now let's look at this tax payment in detail shall we!!
You say you will pay tax on earnings over and above 10,000 miles a year, if you continue to charge 45p per mile over and above 10,000 miles per annum, instead of the reduced rate of 25p per mile, which you should charge to avoid any tax liability, as per the HMRC thresholds for mileage allowances for the tax year 2012/13. These thresholds can be found on this link;
http://www.hmrc.gov.uk/paye/rates-thresholds.htmThe standard tax code for the tax year 2012/13 is 810L, which equates to earnings of £8,105 per annum before
ANY tax is payable, or in HMRC speak this is the Basic Personal Allowance. Again this information is available on this link;
http://www.taxrebateblog.co.uk/index.ph ... -tax-year/Now, if you can charge 25p per mile over and above 10,000 miles a year without any tax liability, it follows that you will only be taxed on the extra 20p per mile [over and above the 25p allowable rate over the 10,000 miles annual threshold] should you indeed continue to charge 45p per mile over the 10,000 miles a year threshold.
So you will be taxed on earnings of 20p a mile over 10,000 miles a year, if you continue to charge 45p a mile after the 10,000 mile threshold.
Now let’s divide 20 pence [per mile] into the HMRC’s Basic Personal Allowance of £8105 for the tax year 2012/13.
So, £8105 ÷ •20 [20 pence] = 40,525 miles + the initial 10,000 miles at 45p a mile on which tax is not payable = 50,525 miles a year for the current tax year before you will actually pay any tax at all.Bearing in mind your mileage is probably charged as ‘round-trip’ mileage, which at 45p a mile is equivalent to 90p a mile one way and there are many private hire operators running at 90p a mile in Brum,
IS IT ANY WONDER THAT THE ‘TAXI’ TRADE IS SCREAMING OUT FOR VOLUNTEER DRIVER TO BE LICENSED AS HIRE AND REWARD DRIVERS?