What the employer needs to know

If your employees use a vehicle for business purposes and the fuel is not a benefit, as an employer, you are legally required to keep comprehensive mileage records. Failure to do this can result in intensive HMRC audits, which may involve examining more than mileage records, plus eye-watering fines that can reach into 6-figures.

To ensure clarity for both employees and HMRC, it is important that accurate and simple guidelines are in place. These guidelines should lay out what the business expects of its employees in terms of what is acceptable and what is not in relation to mileage claims.

What the employee needs to know

It is important to note that fraudulent mileage claims are against the law and you can be prosecuted if you are found to have defrauded your employer. It is also your personal responsibility to compile records of travel expenses (as set down within your employer’s guidelines) in a timely and organised manner, both to ensure that you are not out of pocket and to enable your employer to comply with the HMRC's requirements.

If your employer does not reimburse you up to the advisory fuel rate per business mile, you may be able to seek tax relief on the outstanding amount. Likewise, if you are reimbursed over the advisory amount, HMRC defines this as supplementary income and you will be required to submit a self assessment form and pay additional tax.

Requirements for a mileage expense claim

  • The name of the driver
  • The date of each business journey
  • The starting / finishing point of each business journey
  • The mileage for each business trip
  • The purpose for each business trip
  • Any other expenses incurred (parking, tolls etc)
  • The rate at which mileage was reclaimed

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