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Cash iQ

If your business offers drivers a cash allowance rather than a company car, TMC could help you make savings through Cash iQ

How does it benefit your business and employees?

Using Cash iQ can benefit your business in a multitude of ways:

  • Your company will benefit from a reduction in NI payments
  • The employee will benefit from a reduction in NI contributions based on the business mileages recorded
  • Employees will no longer need to claim MAR on P87 or have the relief delivered through MARORS. The relief is delivered directly through their payroll
  • TMC will provide you with a simple payroll file each month based on the employee’s mileage

How is it calculated?

TMC use the employee’s expected annual business mileage to determine the appropriate band for calculating the taxable element of their car allowance and the non-taxable mileage allowance payment. The amounts are fixed and paid monthly to the employee.

TMC determine the expected mileage allowance payment using a mileage allowance of 45p (less any fuel reimbursement).

How does it work?

Employees record their business mileage monthly and are reimbursed for fuel (and/or repay private fuel if using a fuel card) in the usual way.

TMC calculate the value of the Mileage Allowance Relief (MAR) available for tax free payments and the Qualifying Allowance (QA) for NIC free payments available for the month based on the business mileage claimed by the employees.

TMC ensure that any variations in business mileage are treated correctly, for both tax and NIC, and maximise the value of the allowances available.

Payment Values

Our process creates four payment values for the employee:

  • A gross cash allowance paid monthly and subject to the employee’s marginal rate of tax
  • A mileage allowance payment based on the available AMAP for the mileage band.  This is tax and NIC free
  • Tax free mileage allowance payments subject to NIC (if required)
  • Taxable mileage allowance payments that are NIC free (if required)

TMC will provide you with a simple payroll file for the adjustments.

The employer benefits from being able to claim a reduction in NI contribution based on the business mileages recorded.

The Savings

The tables below demonstrate the savings the employer and employee can make from Cash iQ.

A total of £991 per year.

The example is based on a 20% rate taxpayer with a £6,000 per annum car allowance driving 15,000 business miles per annum with a reimbursement of £0.13 per mile.

Employer Cost Employer Cost – with Cash iQ
Car Allowance £6,000 Car Allowance £2,160
NIC £828 NIC £298
Mileage Allowance Payment £3,840
15,000 business miles @ 13pp £1,950 15,000 business miles @ 13pp £1,950
Total cost to employer £8,778 Total cost to employer £8,248

Employer saves £530 per year

Employee Position Employee Position – with Cash iQ
Car Allowance £6,000 Car Allowance £2,160
Less NIC (12%) -£720 Less NIC (12%) -£259
Less Tax (20%) -£1,200 Less Tax (20%) -£432
Mileage Allowance Payment £3,840
Less Tax on Mileage Payment (20%) -£80
15,000 business miles @ 13pp £1,950 15,000 business miles @ 13pp £1,950
Mileage Allowance Relief £760 Mileage Allowance Relief £72
Total to employee £6,790 Total to employee £7,251

Employee saves £461 per tax year.

To find out how much we could save you, get in touch! Just by knowing the number of users and average business mileage per annum, we can calculate the expected savings we could make for your business and employees.