http://www.hmrc.gov.uk/RATES/travel.htm

Two ways to look at this.

The 40p per mile is a typical cost for using a car. A new car doing a small mileage will cost a lot more than that, an old car doing a large mileage will cost a lot less. I remember getting back most of the purchase cost of one of my cars on a single long journey. But this is the maximum rate that HMR&C will allow as a tax-free payment for using your own car for company business.

The other side of the coin is that your company also agreed to pay you £200 per month. This will be taxed but, if they agreed to pay it, then that is what they should do. If you bought a car specially so that you could do the travelling, then it is not quite the normal situation of already having a car and using it for work. You should discuss the matter with whoever agreed to the £200 but you can't have it as a tax-free allowance.

I work for a small company, recently we have noticed a drop in sales so myself and the MD devised a plan to generate some new sales.

Part of my role involves visiting potential customers travelling 3 days a week. The company cannot afford to by a company car for me to use, so I offered to by a car and take a cash allowance. Knowing that cash was tight for them I said I would only want £200 a month cash allowance plus millage at the hmrc standard of 40p and them 25p thereafter. This was all agreed and I purchased a vehicle.

However our accounts department are causing me a problem they have made out to my MD that I a ripping him off, stating that the arrangement that we have come to isn’t right I should either have a cash allowance ( £200) or the millage but not both. They are now refusing to pay me my cash allowance because they say they only have to pay me that if I have previously had a company vehicle.

From what I have read and researched on the internet I feel I am in the right and they are wrong. I am tempted to sell my car and say I haven’t got a vehicle for work use. And see what the outcome would be.

Does anyone have any legal information that I can present them with to prove that I am correct in what I have said.

if anyone can help i would be greatful