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Excess mileage payments
Newsletter issue – June 2023
Petrol and diesel pump prices are high, but the tax-free mileage rates (see table) payable to employees who use their own vehicles on business haven‘t been adjusted for over a decade.
Vehicle |
First 10,000 miles per year |
Above 10,000 miles per year |
Cars and vans |
45p |
25p |
Motorcycles |
24p |
24p |
Many employees just can‘t afford to use their own car or motorbike for business journeys if they only get reimbursed at these rates, so some employers pay more. But any excess above the tax-free rate is taxable, and subject to NIC.
If you have paid your employees higher mileage rates than in the table above, you need to treat those excess amounts as extra salary and put them through the payroll. You also need to communicate this treatment to the affected employees.
Where the employee‘s own car is purely electric you can still pay up to the rates in the above table for business journeys, tax and NIC-free.
Where the employee charges their private electric car at a charging point at work for free, there is no taxable benefit for the employee on using that electricity. Things get more complicated if you reimburse your employee for the cost of charging their private electric car at their home, or at a road-side charging point.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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