Car/fuel allowance for sales person

[sarasorrento]

Hi folks, help required please.

I am just about to take on a sales person. In his/her contract I want to include a car allowance and pence per mile for fuel.

I have never had to include these allowances in an employment contact before, what would be a fair allowance for both the car and fuel.

The one person I have asked has suggested £350/month and 18pence/mile. Is this reasonable, I have nothing to judge it against?

Are there any other considerations I should be making re car/fuel?

As always, thanks for your help.

Sara

 

[Newchodge]

If the employee is using their own car you can pay them up to 45p per mile before HMRC considers that they are making a profit out of it. This rate applies up to a certain mileage per year, and then reduces.

A fixed allowance plus lower mileage rate is used less and less - it used to be most common in public service when an individual was deemed to be an essential car user and was given an allowance to ensure they always had a car available, but less per mile as some of their costs had been covered in the allowance. Fewer and fewer employers seem to use such a system these days.

The controlling factor is HMRC, check their website for what is considered allowable.

 

[sarasorrento]

Hi Cyndy, and thanks for your response

Sara

 

[David Griffiths]

As far as HMRC is concerned the £350 per month is taxed in the same way as salary. You could pay anything up to 45p per mile tax free, but you wouldn't want to do that as well as paying the monthly allowance.

If you pay less than 45p the employee can submit an expenses claim for the difference, which in your case would be 27p per mile

You don't say how many miles you expect the employee to drive in a year. On the figures that you've given, you'd be out of pocket if the employee does less than 15000 business miles in the year, and better off if they drive more.