Mileage allowances: automated management with Expensya
Do you regularly carry out business trips with your personal vehicle? Say goodbye to calculating mileage allowances and complicated rates: with Expensya, everything is automated and managing your mileage expenses has never been easier!
Mileage Allowance Payments (MAPs) is what the employee is paid for using their personal vehicle for business-related journeys. Employers can pay their employees a certain amount of MAPs every year without having to report them to HMRC, this is known as an ‘approved amount’.
The reimbursement of mileage expenses can be received by anyone working in a company, no matter their status (i.e., directors, employees) or seniority within the company, provided that a personal vehicle is used for business trips. Individuals external to the company are not entitled to mileage allowances.
In order to be reimbursed, employees who use their own vehicle must have evidence for their claim. This means that employees should keep:
- A record of the dates, destination, and purpose of each business journey
- A log of business miles driven
The best way to do this is through Expensya, the solution that automates this process and makes it as seamless as possible.
Mileage allowances cover all costs related to the use of a personal vehicle during a business trip, i.e.:
- Gas costs (gas, diesel, etc.)
- Maintenance costs (MOT, repair, cleaning, check, etc.)
- The vehicle’s annual insurance premium.
- Road tax
- Wear and tear
Keep in mind that parking expenses (lots, parking meters), tolls, congestion charges, and other incidental expenses are not covered by mileage allowances. In order to be eligible for reimbursement, employees need to prove that these expenses have been “wholly and exclusively” incurred for business purposes.
Therefore, two conditions must be met in order to receive mileage allowances:
- Traveling from one office to another
- Traveling to a temporary location to perform necessary business. For example, meeting a client or attending an event
Mileage allowances are calculated using approved mileage rates that are published by the HMRC and updated every year. These rates allow all people that carry out a business trip to calculate the amounts that must be declared and is dependent on three factors:
- The type of vehicle (car, motorcycle, moped).
- The number of miles traveled by the vehicle in a professional context.
- Fuel rates.
Keep in mind that mileage expense declarations must include payment receipts with all information relative to the trip: date, destination, route, purpose, and miles traveled. Otherwise, the mileage allowances will be subject to social charges, in accordance with the tax administration.
When an employer reimburses costs linked to the use of an employee’s personal vehicle for professional purposes, these allowances are exempt from social charges - within the fiscal limit set by the HMRC for mileage allowances.
The statutory system of permitted tax-free mileage allowances is available if you use your own car for business travel.
The maximum amount per business mile is known as the approved mileage allowance payment (AMAP).
On a tax- and NIC-free basis, employers will pay or reimburse up to those amounts. If they pay less than those sums, the remaining balance of the accepted amount may be reported for tax relief.
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