Dodgy company travel policy?

fitterman

The company I work for has introduced a new travel payment system, instead of paying overtime for travel based on the hours, they are using the mileage from home to the customers site.

The system is as follows, if you travel in a company vehicle, then you are paid 40p/mile which is then taxed however if you travel in your own vehicle then you are paid 40p per mile which is not taxed.

I know that both of these are legitimate in their own right, but in reality some of the payment applied when driving your own car is really paying for your time but is being presented as a tax free re-imbursement of expenses.

This means that the difference between driving a company vehicle and your own car is the difference in being taxed on the 40p or not. For somebody on standard tax code this amounts to 8p for using your own car.

The problem is, that you can not claim the additional 32p that the Inland revenue would allow for underpayment of travel expenses, because as far as they are concerned, you have been paid 40p.

This doesn’t seem right to me, are they allowed to use the system in this way?

mrkbrrws

It doesn't seem right. If you drive a company vehicle and get paid 40p it can only be for your time.

If you get 40p tax-free it can only be for your mileage expenses. So it follows that either they shouldn't pay the taxed 40p to the first group, or they should also pay it to the second group on top of the 40p you already get.

brightonman123

what about insurance cover, if involved in an accident on work time?

fitterman

Insurance is down to the driver, if it's your car then you are supposed to get insurance which covers business use.

fitterman

mrkbrrws wrote: »

If you get 40p tax-free it can only be for your mileage expenses. So it follows that either they shouldn't pay the taxed 40p to the first group, or they should also pay it to the second group on top of the 40p you already get.

I agree completely but the company insist that both payments are legitimate because they have checked with the inland revenue.
It's just the way that they are applying them which seems wrong. The company won't listen so I don't know what I can do about it.

mtem74

The company can pay whatever they want to really, it's a matter of employment law rather than tax issues. So long as the company are taxing etc.. the payments correctly HMRC won't have any issue with it.
Thats not to say it's right. I agree with the previous posts in that you are being penalised for using your own car. In fact the system discriminates against those using their own car.

silvercar

Wonder if minimum wage legislation applies?

Otherwise its a question of checking your contract of employment.

When you make a decision on whether to take a compnay car (if a csh payment is offered instead) you need to take this policy into consideration.

fitterman

silvercar wrote: »

Wonder if minimum wage legislation applies?

No, I just checked and as the journeys are outside of normal hours, they are not covered by minimum wage.