Mileage allowance

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in AAT member discussion
At present we pay our reps 0.40p per mile for using their own car. I have just been asked if it is true that the company can pay just 0.14p and the rep can reclaim the remainder through their self assessment. If this is right then how come we were not told about this when I did my course a couple of years ago, or is this something new?

Does anyone know anything about this please? I am afraid the government website is like a minefield to me. I am not very good at looking for info on websites yet. It seems that one can spend a lot of time searching and time is something I do not have, so any input will be welcome.

Thank you.

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Mileage allowance

    Hi

    There seem to be lots of things said about car fuel by various people, some of which is mis interpreted or mis understood.

    Generally you have 2 rates of fuel reimbursment, one for those who have funded/company cars and another for those who use their own car for travel. I.e. those who use their own car get a higher rate for wear on the car. It is also affected by how many miles they do in a tax year - after so many thousand miles the rate drops to a lower teir.

    HMRC should be able to advise on the max limits you can pay an employee.

    Neil
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Mileage allowance

    Linda,

    Yes I knew about it ever since it was first implemented by the Inland Revenue about 4 years ago. The fixed rates in respect of employees own car are:

    Cars and vans:
    First 10,000 miles in tax year: - 40p per mile
    Each additional mile: - 25p per mile

    Motor cycles: - 24p per mile
    Bicycles: - 20p per mile

    The 10,000 miles limit is not prorated for the length of employment; If the employee is transferred from another subsidiary within the same UK group then the employment is treated as one and only one lot of 10,000 limit applies.

    In addition, if another employee travels (giving a lift to fellow employee on business) in the same car then employer can pay additional 5p per mile for each employee per mile.

    Also, the limit applies to business mileage and so commuting from home to work and back is not payable.

    The link is here:

    http://tinyurl.com/debab


    If the company pays less than the statutory rates then employee can claim the difference against his employment income. This is in the link I have provided (3rd paragraph).

    If the company provides a company car but no fuel is provided (company car - no fuel) then employee can claim at the “Advisory fuel Rates” for expenses incurred in the course of business wholly and exclussively. The rates are based on CC of the car and the link for it is here:

    http://tinyurl.com/732lq

    Hope this proves useful.


  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Mileage allowance

    Thanks everyone for your responses. I will check the link and read up on it. Basically my boss heard from someone that we could pay our reps less so I am sure the idea of saving some money appeals to him.

    Neil H. You seem to be very clued up on a lot of issues. Good to have someone like you to chat with. As I am on my own in our company(ie I do all the accounts)it is difficult to talk 'accounting' with any of my colleagues. All they say is I cannot get my head round accounting at all.

    Have a nice day everyone
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:Mileage allowance

    An employer can pay whatever they like for mileage allowance. As xfsgpr states, the employee may receive that 40p and 25p in mileage allowance tax free. If they are paid any more, it is taxable, if they are paid less, they can claim tax relief on the difference.
    I suspect the 14p per mile bit may be something to do with input VAT on mileage allowance. A VAT registered employer can claim as input tax 7/47 of the fuel element of the mileage allowance. HMRC quote 14p per mile as the fuel element when the engine size is over 2000cc.

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