Mileage payments...


M

Mac

Have I got this right? If a company pays an employee mileage payments at
the HMRC rates (40p pm), then the employee pays income tax + NI on their
total pay EXCLUDING the mileage payments, but the employer counts the full
pay INCLUDING mileage as an expense towards corporation tax?

Thanks.
 
M

Martin

Mac said:
Have I got this right? If a company pays an employee mileage payments at
the HMRC rates (40p pm
.... for the first 10,000 business miles per tax year, then 25p...

), then the employee pays income tax + NI on their
total pay EXCLUDING the mileage payments, but the employer counts the full
pay INCLUDING mileage as an expense towards corporation tax?
Yes - unless VAT registered and sensible, in which case they reclaim VAT on
the (receipted) fuel element and claim CT relief on the balance.
 
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M

Mac

.... and no employers NI either?


Martin said:
... for the first 10,000 business miles per tax year, then 25p...

), then the employee pays income tax + NI on their

Yes - unless VAT registered and sensible, in which case they reclaim VAT
on the (receipted) fuel element and claim CT relief on the balance.
 
R

Ronald Raygun

Martin said:
Yes - unless VAT registered and sensible, in which case they reclaim VAT
on the (receipted) fuel element and claim CT relief on the balance.
How does this work in practice? A receipt only confirms how much was
spent on how much fuel. How can one tell how much fuel was used for
the business miles? Would the employee be expected to keep and submit
*all* fuel receipts together with an account of how many business *and
private* miles were driven during the whole accounting year, and would
it then be presumed that the business/private split of fuel cost is the
same as for the miles?
 
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M

Martin

Ronald Raygun said:
How does this work in practice? A receipt only confirms how much was
spent on how much fuel. How can one tell how much fuel was used for
the business miles? Would the employee be expected to keep and submit
*all* fuel receipts together with an account of how many business *and
private* miles were driven during the whole accounting year, and would
it then be presumed that the business/private split of fuel cost is the
same as for the miles?
Hi RR, it's simpler than that...

As you know, HMRC publish "fuel costs per mile" figures (which vary by c.c.
and fuel type) and the employee merely has to submit enough fuel vat
receipts to cover that cost (i.e. "HMRC rate" x "business miles claimed").
It doesn't matter where or when the fuel was purchased - although it's
"expected" that the receipts will be dated within a month or two either side
of the business-journey date.
 

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