Calculating Mileage? - Home / Office / Client / Home etc Help!

RedShep

Hello there,

Please could you help? I own a small company and I want to confirm to employees how they should calculate their mileage. For example Employee1 lives in Southampton, our offices are in Reading and our client is in York. Currently Employee1 claims from Southampton to York and York to Southampton. They spend a whole day at the client.

I think that is incorrect. Is there some kind of triangulation rule that can be used for each trip? What happens if the client is in Portsmouth for example?

One other thing. We currently pay 40p per mile and a car allowance. We are thinking of reducing this to 20p per mile and then the employees can claim tax relief on the other 20p. Does that sound fair? I do not want to be unfair / annoy our employees.

Thank you so much for any help - I have searched the internet everywhere for an answer!

Red

MrsMoo2U

RedShep wrote: »

Hello there,

Please could you help? I own a small company and I want to confirm to employees how they should calculate their mileage. For example Employee1 lives in Southampton, our offices are in Reading and our client is in York. Currently Employee1 claims from Southampton to York and York to Southampton. They spend a whole day at the client.

I think that is incorrect. Is there some kind of triangulation rule that can be used for each trip? What happens if the client is in Portsmouth for example?

One other thing. We currently pay 40p per mile and a car allowance. We are thinking of reducing this to 20p per mile and then the employees can claim tax relief on the other 20p. Does that sound fair? I do not want to be unfair / annoy our employees.

Thank you so much for any help - I have searched the internet everywhere for an answer!

Red

I am not an HR rep but I can tell you how the departments that I work for have done this. I usually get 40p per mile so cant advise on the change of rate but some of my colleagues had a lease car and were only paid the lower rate of mileage. in the past I have had to claim expenses as follows:-
If travelling to the meeting from home - work out total miles from home to meeting place then deduct the normal home to office mileage(return) , claim the difference (unless travelling on a day that would not normally travel to the office then it is paid for the full cost of travel)
I now work from home so I am paid the full cost of travel as my home is my base. This is how government departments operate.

Hope that helps

System

The way that my company operates is that I can claim the lesser of Home-client & return or office-client & return. We currently get 25p per mile and claim the extra ourselves

RedShep

!!!!!! wrote: »

The way that my company operates is that I can claim the lesser of Home-client & return or office-client & return. We currently get 25p per mile and claim the extra ourselves

Hello !!!!!!,

That sounds like a good way to work and easy to calculate. Most employees live fairly close to the office anyway. However, Empoyee1 who lives quite far south of our offices probably wont be happy as when they are up North they will only be able to claim from the office to the client up North.

Thank you!

Does anyone else use this method?

Red

System

This is a multi-national not a small company. we do have guys spread throughout the country. it's very much swings and roundabouts. This way, in most cases, the person is only claiming for the actual journey.

getmore4less

I think you have to be carefull here.

Where I chose to live is my/employees business so you have to be carefull not to be seen to be too tight and mean otherwise people will just push back by being less cooperative.

Milage upto the distance from the normal office is a sensible rule

Look for sensible claims off the people that live close to a place, the default option is to always come into the office and travel from there anyway, depends who is doing the schedules.

As for actual payments if currently paying 40ppm and giving an allowance that is fairly generous(depending on the size of the allowance) to drop to 20ppm is a big drop.


Remember if you drop the money to far people can(subject to contract) just stop using their own cars and you would have to provide alternatives for business.

Anything less than 40ppm is not covering costs for a lot of people.
http://www.theaa.com/allaboutcars/advice/advice_rcosts_petrol_table.jsp

Gertie_Walker

Where is the office base of these employees? Home, or the cities you mention?

Savvy_Sue

Gertie_Walker wrote: »

Where is the office base of these employees? Home, or the cities you mention?

Key question: and I know there's a page on the HMRC website you can 'read all about it' on.

I've never been in quite that situation, but the most 'organised' employer I ever worked for used to state explicitly that your travel time to a venue other than the office could be claimed, but only the difference between travel to the office and travel to the venue.

So if I spent a day training at head office, I could put the day's training on my timesheet, plus an hour's travel time, because it used to take me 1.5 hours to get to head office and back, but only half an hour to get to my usual office and home.

One thing about dropping that mileage allowance: your employees CANNOT claim the other 20p from the tax man if you do that. I'm not going to be able to explain this very clearly, but I think all they can do is say to the taxman "My employer only pays 20p per mile and I've done 1000 business miles, please give me back the tax on 1000 x 20p".

That's on the HMRC website too, with worked examples, but my connection's not good enough to make me want to look for it.

An alternative might be to say that people can only claim for the cheapest reasonable method of travel. I don't think it would be reasonable to expect someone to travel from Southampton to York by coach and back in a day with a day's work in the middle, but the train might be do-able. If train is cheaper than mileage, reimburse the train fare. But you'll need to know how far in advance the employee is able to book travel: on the day bookings can be horrifically expensive!

theesel1994

Useful reading
http://www.hmrc.gov.uk/mileage/employee-factsheet.pdf

http://www.hmrc.gov.uk/forms/p87.pdf

martindow

If you reduce mileage to 20p your employees will not get the other 20p back from the tax system just their tax on 20p which is 4p on basic rate tax. I think you need to be careful here. If you reduce a 'perk' which at 40p doesn't pay more than the actual cost, a backlash and loss of goodwill from your employees refusing to use their cars or creating journey patterns to maximise their allowances could cost a lot more than you save.

I think the consensus that you should pay an allowance on actual mileage minus their normal home to office mileage is very reasonable.

Premier_2

RedShep wrote: »

Hello there,

Please could you help? I own a small company and I want to confirm to employees how they should calculate their mileage. For example Employee1 lives in Southampton, our offices are in Reading and our client is in York. Currently Employee1 claims from Southampton to York and York to Southampton. They spend a whole day at the client.

I think that is incorrect. Is there some kind of triangulation rule that can be used for each trip? What happens if the client is in Portsmouth for example?

One other thing. We currently pay 40p per mile and a car allowance. We are thinking of reducing this to 20p per mile and then the employees can claim tax relief on the other 20p. Does that sound fair? I do not want to be unfair / annoy our employees.

Thank you so much for any help - I have searched the internet everywhere for an answer!

Red

As the owner of the company, you can essentially do whatever you want.

You, or a member of your management team, should be reviewing and approving all expense reports before paying them.
If you don't agree with the way they have been completed, return them unapproved (preferably with details of why they are not being approved).
It is however wise to provide your employees with guidelines on how to complete the expense report so that you are not paying them for wasted time & effort completing expense reports that you go onto return.
A wise manager would usually draw up these guidelines in consultaion (and hopefully the agreement) of their employees or their employees representative.

You can also usually set whatever mileage rates you want. (as such things are not usually expressly laid out in any form of employment contract)
However, you should equally be aware that the employee is usually under no obligation to use their own transport for company business. Perhaps your employees may decide you should provide them with the means of transport required to fulfil the tasks you ask them to do.

Of course the tax man has his own rules over what are deemed allowable expenses, irrespective of what your company actually pays.