At accountalitics we strive to help business owners make sense of the numbers and make informed decisions. Hence, in this blog post, we are answering your questions about busienss travel, the ones that have always been on your mind but you have not decided to ask anybody yet – until now.
Part of the process of management accounts preparation process is checking if financial data has been recorded correctly.
How do you record business expenses if you’re an employer?
And what records should you keep as an employer and as an employee?
Part 2: Business expenses and employee travel
Travel, Parking, Mileage, Fuel and Company Car
Is it better if you as an employer pay for employees’ business travel directly or reimburse employees for their expenses?
That’s a business decision for you to make, further guidanceon reporting employees’ expenses can be found here: https://www.gov.uk/employer-reporting-expenses-benefits/overview
Travel by train/bus – how to record it?
If a season train ticket has been added to personal annual salary do you need to report it on the P11D as benefit?
Providing the amount for the train ticket is added to gross pay and taxed accordingly then there is no need to report it on P11D.
Should your employee record mileage when travelling by train or bus?
No, when your employees travel on business by train or bus they record the cost of the travel.
Travel/Mileage log and rates
Should your employee keep a log of private as well as business use of the company van?
Yes, there should be both logs, for private and business use, further guidance is available here https://www.gov.uk/expenses-and-benefits-company-vans/whats-exempt
If your employee attends multiple business sites (e.g. is an area manager) on a relatively frequent basis (a couple of times a week per site) using their own car, would this count as commuting or business travel?
This could be potentially classed as ordinary commuting between home and the first site visit of the day, and the last visit and home. You can find more information here: https://www.gov.uk/government/publications/490-employee-travel-a-tax-and-nics-guide
Is there a passenger mileage allowance that can be claimed and is there a requirement for the passenger to be an employee?
Yes and No.
There is a mileage allowance for a passenger of 5p per business mile and they don’t have to be a direct employee, as long as they need to travel as part of that company’s business.
Should you or your employees include time of travel or is the date sufficient?
If you as an employer use benchmark rates, then a record of the start and end time of the journey(s) should be kept to show how many hours are involved.
What evidence do you need to ask for when reimbursing mileage claims in cases when employees use their own cars?
You should ask your employees to keep a record of each business journey of the date of travel, start and end place of a journey, number of miles and reason for the journey.
Can you use a percentage of miles travelled for instance 80 % of petrol bills estimated as business use?
No, the employee should be keeping a log of the business miles travelled to ensure they are not claiming back more than they are entitled to.
Do you have to use the start and end mileage on the vehicle for each journey? OR Can you use the mileage shown on google maps if you have the start and end postcode?
You shouldn’t use google maps as the employee might not have followed the route it gives you. You should be asking for the actual start and end mileage.
Your employee has been given a company car but has been putting his own fuel, how much can they claim for a hybrid 1.4 litre car per mile?
The advisory rates are on GOV.UK and are updated quarterly. The rate for a hybrid car is the rate applicable to the fossil fuel used. Latest rates are available here: https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016
You have an employee whose vehicle costs over 25p per mile to run and have detailed information to substantiate this. If they exceed 10,000 miles per year and you choose to pay the difference between 25p per mile and the actual running cost of the vehicle per mile, do you have to declare this as a benefit on their P11D?
Yes, you would need to include the extra over the 25p per mile over 10,000 miles on the P11D. The AMAP is an average rate for all cars – the reason for the reduction after 10,000 miles is because most of the running costs are classed as reimbursed from the 45p for the first 10,000 miles.
Car and fuel payments – a benefit?
You provide a monthly payment labelled as a car payment to your staff which is essentially a cash amount towards their own private car. Should you report this on P11D?
Yes, any cash payments made to employees must be included in PAYE for tax and national insurance.
Can you as an employer reimburse an employee for the cost of fuel instead of paying the set mileage rates for business trips as long as a log book is kept and a receipt for fuel provided?
No, you can only reimburse your employees for business travel at the set mileage rates.
If you reimburse the full amount then this would be reportable as a chargeable benefit.
Can your employee claim for car insurance and MOT?
No, they can’t as mileage allowance is intended to cover such expenses, and neither of these expenses is exclusively a business expense because the employee would have to MOT their vehicle for their own use (and insure it).
Is your travel to the training course an allowed business expense please?
Yes, your travel to work-related training is exempt, please see guidance https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/585099/480__2016__12_16.pdf
You’ve provided your employee with a company car and cover the cost of fuel whether for private or business travel, does this give rise to a benefit in kind?
Yes, but if you would like to avoid charging a fuel benefit, then the employee must pay back all of the private fuel. Further guidance can be found here: https://www.gov.uk/expenses-and-benefits-company-cars/whats-exempt
Parking costs and other expenses when travelling on business
Can you reimburse your employees for parking charges when they visit customers?
Yes, you would include parking charges for business travel.
Your employee is home based 4 days a week and office based 1 day per week. Would the day when travelling to the office count for mileage allowance?
No, because that’s a regular travel to the office so it is ordinary commuting.
Can you use the worldwide subsistence rates issued by HMRC?
Yes, if the employee is travelling overseas for work you can use the benchmark rates set by HMRC: https://www.gov.uk/government/publications/scale-rate-expenses-payments-employee-travelling-outside-the-uk