A fleet manager's guide to logging driver mileage
To help fleet managers keep a better track of logging driver mileage, we’ve created this easy-to-follow guide.
As a fleet manager, you’ll know it can be difficult to keep track of what is and isn’t eligible for tax relief when logging driver mileage. The entire process will likely leave you with questions like ‘can I claim mileage from HMRC?’ and ‘how do you calculate mileage expenses?’ among others.
This doesn’t have to be a source of confusion. To make it simple for you, we’ve put together an easy guide to help you understand the process better.
Here are some of the most pressing questions you’ll want answering:
Is a mileage allowance taxable?
In some cases, tax will be due on mileage. If you have employees that use their own vehicles for business purposes, then you’re required to pay them Mileage Allowance Payments (MAPs). Should these go above national guidelines, you’ll have to report your mileage to HMRC and pay tax on the excess.
How do you calculate mileage expenses?
The mileage allowance, or ‘approved amount’, is worked out by multiplying the miles for each year by the rate per mile. This rate depends on the type of vehicle, and how many miles have been driven. For cars, it’s 45p for the first 10,000 miles, and 25p thereafter.
So, for example, if an employee drove 12,000 miles in their car, the employer pays a flat rate of 45p for the first 10,000 miles, then 25p for the last 2,000 miles after. Thus, they would be paid 5,000 overall.
You can read more about this subject here.
Can I claim mileage from HMRC?
If your employer doesn’t use up all of their approved amount balance, they can get tax relief, called Mileage Allowance Relief (MAR. You can make optional reports of these unused balances through the Mileage Allowance Relief Optional Reporting Scheme (MARORS).
If an employee uses a company car, they could claim tax relief on the amount they spent on fuel – providing these were business expenses. As the employer, if you reimburse some of the money paid, you can then claim tax relief on the difference.
As well as fuel, employees can claim relief for road tax, MOTs and repairs too. Additionally, passenger payments are a type of tax-free benefit that employees can enjoy. If one of your employees carries another employee in their own car or van on a business journey, the driver can receive up to 5p per mile in tax relief.
Do I pay National Insurance on mileage?
You're required to pay Class 1 National Insurance for expenses associated with relevant motoring expenditure (RME). These include payments that would classify as MAPs, but are paid to someone who isn’t an employee, for the employee’s benefit. Any other cash reimbursement paid to the employee for vehicle-related costs is also classed as RME.
Not all RMEs will need to have Class 1 NI deducted – a certain amount of RME is considered the ‘qualifying amount’. This is calculated by multiplying the business miles by the rate per mile within that specific earning period (45p per mile for cars under 10,000 miles). Also, National Insurance doesn’t have any Mileage Allowance Relief.
How much VAT can you claim on mileage?
Providing you aren’t paying a fixed rate via the Flat Rate Scheme, you're eligible to claim VAT back on your fuel. If the vehicle is for business use alone, then all the VAT can be reclaimed.
When used for both business and private purposes, there are two different ways to claim:
1. You could choose to log through mileage records so you can reclaim the fuel attributed to business trips
2. Or you could opt to reclaim it all and pay the correct fuel scale charge for the vehicle
Another alternative is not to reclaim it at all. This would be beneficial if the business mileage is lower than the fuel scale charge, although it’s worth noting that if you do this for one vehicle, you wouldn’t be able to claim it on any others in your fleet.
In addition to this, there are further vehicle-related costs you can reclaim VAT for; repairs, off-street parking, vehicle running and maintenance costs which are all included.
Reduce your fuel costs with Allstar
You can curb your business spend on fuel even further with Allstar. Our fuel cards, like the Allstar Supermarket+ fuel card, are ideal for SMEs as they give you access to the major low-cost supermarket sites, such as Asda, Morrisons and Sainsbury’s.
On top of this, Supermarket+ will help improve the visibility of your business's expenditure. You’ll see how much is being spent on fuel and extras by your drivers, allowing you to better manage business costs. With Allstar Online, you can also view breakdowns of your fleet’s spending habits, while our HMRC-compliant invoices help save time on administrative tasks.
To find out more about how the Allstar Supermarket+ fuel card could benefit your business, get in touch with our team today on 0345 266 5101