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Sam, Accountant
Category: Tax
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Working Tax Credits I am working on a zero hours contract

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Working Tax Credits
I am working on a zero hours contract as a carer visiting people in their own homes. I use my own car for travel between service user’s homes. I made my first claim for working tax credit in January this year giving my income for 2013/14 as £2593.
I have received £549 in tax credit so far this year. On 11th March I reported to the DWP that my expected income for 2014/15 will be approximately £15000. On 12th March I telephoned the DWP to inform them that when I gave an income of £15000 I had forgotten to deduct my work expenses, i.e. mileage, which I estimate will be £4600 calculated on HMRC mileage allowances.
I was informed that mileage allowance was not paid on travel to and from where I work which I know. I explained that I only counted mileage from the first house I visited to the last house I visited. She told me that in travelling from one service user to another I was moving from one place of work to another and therefore this was not allowable.
I have been advised by a friend that I might be better off claiming back the mileage on a self-assessment form.
My questions:
Am I entitled to a mileage allowance?
Can I deduct this from my earnings for working tax credit purposes?
Or should I claim back the mileage on a self-assessment form bearing in mind that I will only have paid approximately £1060 in income tax for the current year?

Hi Jim

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

Yes you are entilted to a mileage allowance as your work requires you to travel all day/every day, and I agree that the first trip out and the last trip home are not to be counted UNLESS you have no permanant workplace to attend in which case ALL travel is allowable - see link here from the 490 booklet and see Page 8 item 2.6 - where it highlights Barry as a tree surgeon who works all over and has no permnant workplace.

You do not advsie whether your employer makes good any of the costs for mileage, but if its less than 45p a mile for the first 10,000 miles (and then 25p amile therafter) then you can claim the difference from HMRC, But any element that your employer pays you should not be taxed if it falls within these limits.

Whether you claim these allowable expenses through P87 expenses claim form or via self assessment they still result in your income being £15000 less allwoable expenses (you indicate £4600) so net income that the HMRC Tax credit office would use is £10400 for tax credit purposes. (Then add back in anything your employer pays you for mileage - as you canno have it twice)

But your thoughts on this are accurate and the tax credit office know nothing about allowable expenses is either employment or self employment and therefore I am surprised they are attempting to tell you whats right and whats not!

I would be inclined to just ring the tax credit line up again and state your income (after allowable expenses) will be £10,400 (ONLY if you are not paid any nileage from your employer, if you are then please advsie what you are paid and I can advsie further)



Sam and other Tax Specialists are ready to help you
Customer: replied 3 years ago.

Thank you.


You are very welcome

Let me know if I can be of any further assitance, but it would be appreciated if you could rate the level of service I have provided.