Calculating travel expenses
How to calculate travel expenses? Here, we will focus on the calculation of mileage costs. Personal vehicles used by the employee or management for professional purposes are eligible for expense reimbursement. This allowance is assessed by HMRC using a mileage rate scale. Note: this is only applicable to employees’ and managers’ vehicles.
The mileage allowance principle
This allowance takes into account related expenses:
- Vehicular wear and tear
- Repair and/or maintenance of the vehicle
- Expenses for fuel and tyres
- Insurance premiums
However, it does not cover vehicle purchasing costs, and does not cover fines. The allowance does not cover expenses related to parking or tolls. To be considered as a professional expense, employees must provide itemised receipts. Note: mileage costs are not subject to income tax.
Calculating mileage costs
Mileage allowance is calculated according to a scale established by HMRC and must be accounted for by providing details such as the location, appointment date and sometimes names of those with whom the employee met. This proof must be submitted to the company’s accounting department in order to determine the mileage.
What are the different scales?
Three scales are published each year by HMRC. The first is for cars and vans, the second is for motorbikes and the last is for bikes.
You can refer to this directly on the HMRC website.
One last piece of information, according to employment law, an employee has three years in which to submit any supporting documentation for the reimbursement of mileage expenses incurred by their business trip. However, a company may determine a time limit for producing supporting expense documentation (provided this stipulation is clearly indicated). This means the company may refuse to reimburse expenses submitted after the deadline.