An Employee’s Guide to Claiming Tax Back on Motor Expenses

Are you an employee and use your car for business travel?

If your employer doesn’t reimburse you for using your car for business journeys, did you know that you can reclaim tax from Revenue? You can claim for both running expenses and wear & tear.

Procedure

The first thing to do is to calculate the total annual running costs of the car, including fuel, insurance, motor tax, repairs and servicing. Then work out the total mileage (in km) for the year and the total business mileage (in km) for the year. Only the business portion of motor expenses will be taken into account by Revenue.

Enter these details together with the details of your car on the Car Expenses Claim Form and send to your local Revenue office.

If the claim is successful, your tax credits and/or standard rate cut off point will be increased by the amount of the claim.

Wear & Tear Allowance

The form includes a section on claiming for wear and tear allowances, also called capital allowances. This is to cover the wear and tear of the car when you used it for business purposes. You get 12.5% of the cost of the car (subject to limits below) as a wear and tear allowance. You then restrict it to the business portion of mileage. Therefore if the car cost €16,000 and you used the car 20% for business, the wear and tear allowance would be:

€16,000 x 12.5% x 20% = €400

There is a limit of €24,000 on the cost of the car. Therefore if a car cost €26,000, you can only claim €24,000 when calculating the wear and tear allowance. And it’s bad news for cars with high CO2 emissions. If your car has CO2 emissions of between 156-190 g/km, the limit is reduced to half the cost of the car or €12,000, whichever is lower. Cars with CO2 emissions above 190g/km don’t qualify for any wear and tear allowance.

Vehicle Category

A / B / C

D / E

F/ G

CO2 emissions

0-155 g/km

156-190 g/km

191 g/km +

Limit

€24,000

The lower of €12,000 or 50% of the cost of the car

Does not qualify for wear and tear allowance

Warning

You cannot claim for any expenses that have been or will be reimbursed by your employer. Otherwise, any reimbursement by an employer, including scale allowances, will be treated as pay and should be taxed accordingly.

If your car was sold, scrapped or stolen during the year it can give rise to a balancing allowance or balancing charge. You should ensure that you read the instructions on the form carefully. Otherwise, you could end up paying additional tax.

You can submit a claim form for previous years subject to the rule that a claim for tax relief must be made within four years after the end of the tax year to which the claim relates. In 2013, you can claim for 2009, 2010, 2011 and 2012.

Remember to keep all your motor expense receipts and mileage calculations as they may be required by Revenue. You don’t need to submit them with your claim.

So, if you are not being reimbursed for business journeys by your employer, ensure that you submit your claim. It’s your money!

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