How much mileage should I pay

I'm hoping to get some serious advice about a new employee who will have to travel quite far every day for training in her own car.

It will be 3 days a week for 4 weeks and they will be doing about 120 mile round trip.

The HMRC recommends £0.45 a mile, but that will mean we will be paying £162.00 per week - that is more than I pay for fuel in a month! I think that is a bit over the top.

My OH says his company pays £0.10 per mile.

I've never paid or claimed it before, so I was wondering what the normal amount would be to pay? Any advice would be great. thanks

£0.45 is right, and what we (and very many other companies I know of) pay.

But the rule is to do the travelling as cost-effectively as possible, which e.g. for me frequently means air and/or train rides, rather than car, to London, The Hague, Munich.

So, could the employee not take the train, and then a bus or tram?

Your figures sound like the employee is doing the roundtrip every day: would it not be cheaper to put him/her in a cheap-ish hotel for the middle 2 nights?

At £0.10 per mile I'd tell the employer to stuff it and provide me with a car, leased or hired. Any car costs more than £0.10 per mile to run. And that's where your "that is more than I pay for fuel in a month!" comment shows you up a bit (): the cost per mile is not just for fuel, it's for wear, maintenance, insurance, etc, etc.

I'm hoping to get some serious advice about a new employee who will have to travel quite far every day for training in her own car.

It will be 3 days a week for 4 weeks and they will be doing about 120 mile round trip.

 

The HMRC recommends £0.45 a mile, but that will mean we will be paying £162.00 per week - that is more than I pay for fuel in a month! I think that is a bit over the top.

 

My OH says his company pays £0.10 per mile.

 

I've never paid or claimed it before, so I was wondering what the normal amount would be to pay? Any advice would be great. thanks

45p per mile is the amount that you can pay employee for the first 10,000 (?) miles in the financial year. This covers not just the cost of fuel but also other wear and tear costs on the vehicle and also other running costs such as road tax, insurance etc. You need to ensure that the employee is covered to use their own vehicle for business purposes. The rate reduces after 10,000 miles. You can claim this back against your own company tax bill.

Alternatively, if they are going to travel more than 15,000 miles per year, you are probably better off supplying them with a company vehicle.

Usually when a company pays you something like 10p per mile you get a significant monthly car allowance towards running (and buying) the car. I used to get paid a small amount in mileage that would only just pay for fuel but the monthly allowance was almost enough to pay for the purchase price of my car over a four year period.

It is usual for people to stay overnight if travelling a significant distance or time to the same location several days in a row.

Thank you all for your advice.

I appreciate it.

Unfortunately, it will be 2 x trains + 1 x bus and almost 2 hours either way and almost the same in costs.

Staying overnight, including breakfast and dinner will also be comparable.

I'd rather the new starter be happy and comfortable, so if she wants to drive, she can. It she wants to stay, she can and if she wants to catch the train, then I will think there is something seriously wrong with her.

I'm hoping to get some serious advice about a new employee who will have to travel quite far every day for training in her own car.

It will be 3 days a week for 4 weeks and they will be doing about 120 mile round trip.

You need to check re business miles when those business miles are commuting to a place of work. I know there are rules and guidelines that constitute commuting vs home workers travelling to a head office.

Re your costs, if you are VAT registered, you cannot claim the equivalent VAT proportion off your VAT return and all other related costs to the vehicle. Also the rate drops to £0.25/mile after 10,000; if you continue to pay £0.45/mile, your employee will be liable to pay income tax on the £0.20/mile difference (which they would declare through their tax return...I am pretty sure that you do not pay it through PAYE but I'm sure other accountant forum users can correct me about this!)..

Thank you all for your advice.

 

I appreciate it.

 

Unfortunately, it will be 2 x trains + 1 x bus and almost 2 hours either way and almost the same in costs.

Staying overnight, including breakfast and dinner will also be comparable.

 

I'd rather the new starter be happy and comfortable, so if she wants to drive, she can. It she wants to stay, she can and if she wants to catch the train, then I will think there is something seriously wrong with her.

Just one other point, the Inland Revenue (or whatever they are called these days) do provide guidelines when you provide a company vehicle or a car allowance. The rate then is dependant on engine size and fuel type. These are reviewed every quarter and issued on the website. At moment, for instance, at 1600 - 2000 cc Diesel car pays 12p per mile.

It makes it simpler this way than the employee having to claim back private mileage and the relevant tax complexities around it. In other words, the employee pays for the fuel and then claims back business mileage at the published rate.

The HMRC recommends £0.45 a mile, but that will mean we will be paying £162.00 per week - that is more than I pay for fuel in a month! I think that is a bit over the top.

consider yourself lucky, the rate in 2002 was 40p a mile, and even though petrol prices have come down again recently, this rate never increased with increased fuel costs, increased insurance costs and increased maintenance costs beyond the 5p to 45p.

My company pays 43pence per mile,but if other colleagues travel with me then I get an extra 5pence per mile per passenger.

Yes, as has been said it covers total vehicle running costs not just fuel.

Presumably also, the person will be putting in extra hours journey time.

Luckily it's a one off, not permanent.

As it's for training you would be better asking employee to get receipts for fuel and then reimbursing them rather than paying a mileage allowance.

I wouldn't accept this as an employee - might be worth a shot though.