Mileage

Original Post:

D

Daithi

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Oct 20, 2022
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  • #1
    Morning All,

    I have two employees who I want to treat equally, so one is no worse off financially than the other, what is the best way to approach the cost of the mileage. Employee A is a sales person and is reimbursed for 20,000 miles @ 35p per business mile. Employee B is office based and travels 54 miles per day incurring the cost of the fuel, I know the guidelines from HMRC, but what can the business do to ensure both are treated equally?
     
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    Newchodge

    Newchodge

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  • #4
    Daithi said:
    Morning All,

    I have two employees who I want to treat equally, so one is no worse off financially than the other, what is the best way to approach the cost of the mileage. Employee A is a sales person and is reimbursed for 20,000 miles @ 35p per business mile. Employee B is office based and travels 54 miles per day incurring the cost of the fuel, I know the guidelines from HMRC, but what can the business do to ensure both are treated equally?
    Click to expand...
    Give them both identical jobs.

    Why should they be treated equally when they are incurring different costs? Employee B is driving to and from work and has to pay for that, as does everyone. You can choose to pay them home to office mileage but it is not a tax deductible expense for you and they would have to pau tax on the payment.

    The fact that Employee A has to use their car for buisness purposes means you can and should reimburse their expenses (@45p per mile according to HMRC.
     
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    Mark T Jones

    Mark T Jones

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  • #5
    In line with the above; I'd suggest you are creating unnecessary problems for yourself.

    It isn't normal or expected for an employer to cover travel to work costs. If there is a reason you want to do so, it's a matter between you and the employee.

    Meanwhile, any self-respecting sales person will expect to be remunerated for mileage. HMRC say 45p per mile - a figure which was set well over a decade ago - in which time the cost of running a car has probably doubled, so don't be surprised if they aren't excited by 35p.
     
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    D

    Daithi

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    Oct 20, 2022
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  • #6
    Newchodge said:
    Give them both identical jobs.

    Why should they be treated equally when they are incurring different costs? Employee B is driving to and from work and has to pay for that, as does everyone. You can choose to pay them home to office mileage but it is not a tax deductible expense for you and they would have to pau tax on the payment.

    The fact that Employee A has to use their car for buisness purposes means you can and should reimburse their expenses (@45p per mile according to HMRC.
    Click to expand...
    45p is paid for the 1st 10,000 miles and then 25p after so at 20,000 miles it avgs out at 35p as per HMRC. If i was to say that both do 10,000 miles per year Employee A home to Business & Employee B home to work, would you still have the same view?
     
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    Newchodge

    Newchodge

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  • #7
    Daithi said:
    45p is paid for the 1st 10,000 miles and then 25p after so at 20,000 miles it avgs out at 35p as per HMRC. If i was to say that both do 10,000 miles per year Employee A home to Business & Employee B home to work, would you still have the same view?
    Click to expand...
    Unless Employee A's contract states that they are based at home, they should not be paid for home to office milerage.
     
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    D

    Daithi

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    Oct 20, 2022
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  • #8
    Mark T Jones said:
    In line with the above; I'd suggest you are creating unnecessary problems for yourself.

    It isn't normal or expected for an employer to cover travel to work costs. If there is a reason you want to do so, it's a matter between you and the employee.

    Meanwhile, any self-respecting sales person will expect to be remunerated for mileage. HMRC say 45p per mile - a figure which was set well over a decade ago - in which time the cost of running a car has probably doubled, so don't be surprised if they aren't excited by 35p.
    Click to expand...
    Cheers Mark, the 35p is the avg for the 20,000 miles
     
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    MyAccountantOnline

    MyAccountantOnline

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  • #9
    Daithi said:
    Morning All,

    I have two employees who I want to treat equally, so one is no worse off financially than the other, what is the best way to approach the cost of the mileage. Employee A is a sales person and is reimbursed for 20,000 miles @ 35p per business mile. Employee B is office based and travels 54 miles per day incurring the cost of the fuel, I know the guidelines from HMRC, but what can the business do to ensure both are treated equally?
    Click to expand...
    I'd just use the HMRC approved mileage rates for all staff - it saves hassle.

    You have so many factors to consider trying to arrive at a fair rate for each employee and each car/vehicle.
     
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    HFE Signs

    HFE Signs

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  • #10
    Not really fair on employee A if employee makes the same financial gain for less miles? Keep it simple otherwise you'll have more headaches when you recruit employee C and D
     
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    JEREMY HAWKE

    JEREMY HAWKE

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  • #14
    MyAccountantOnline said:
    I'd just use the HMRC approved mileage rates for all staff - it saves hassle.

    You have so many factors to consider trying to arrive at a fair rate for each employee and each car/vehicle.
    Click to expand...
    I agree with this because when you take the HMRC rates into consideration it does fall in line with "The Jeremy Hawke Vehicle Running Costs Calculation Chart (hey I like that one :):) )

    This means that the more mileage you do you will always be in the ball park for funds to maintain ,repair and replace
     
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    Truemanbrown

    Truemanbrown

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  • #15
    paulears said:
    That 45p rate was not too bad when fuel was just expensive, now it's the crazy price it is now - 45p on some vehicles means they'd be better off not having the allowance and asking for a company car?
    Click to expand...
    You do have two options: -
    • The employer can instead make payments based on the actual costs tax-free.
    • The employer can agree higher bespoke rates based on actual costs with HMRC.
    Both of these options would lead to tax-free mileage allowance.

    The problem with both of these methods is the level of work and record keeping need will not make these two options popular.
     
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