Lots of our clients don't realise that they can't just give an employee £10 for going to a wholesaler to pick up supplies or to visit a customer etc. Instead an employee must submit mileage. There are standardised rates and HMRC do change these quarterly.
The mileage rates not only cover a fuel allowance but they also cover wear and tear on the vehicle. If you do not pay an employee the approved rate, but only allow a lower rate, they can claim the difference on their tax return.
Please remember that you can only claim mileage on journeys that are wholly and exclusively for business purposes. Getting to and from work, is counted as a normal commute so doesn't count. It is important to keep a log of the journeys and vehicle used e.g unleaded 1400cc 24.03 Journey client visit from office to Truro, 13 miles return trip, or something similar. i would also advise asking the employee for a fuel receipt to back up the claim so if HMRC ever want proof of receipts these are on file.
The rates are reviewed every year on these dates:
1 March
1 June
1 September
1 December.
From March 2023 the new rates are:
The information featured in this article is for guidance only, no liability is accepted for the opinions it contains.