Travel costs for work-related driving can quickly stack up, especially if your employees are constantly on the road. That’s exactly why you need to know about mileage allowances.
The good news is that a certain ‘approved amount’ of Mileage Allowance Payments, or MAPs, can be paid out without having to be reported to the tax authority, which is meant to offer an economical way for businesses to invest in the travels of their employees.
When do trips qualify for tax-free mileage allowances?
According to the HMRC, trips are seen as business-related when:
- The work can’t be done unless the trip is made
- The employee needs to be somewhere other than the usual workplace to carry out the job
Also, journeys are exempt from the ruling if they:
- Are part of a daily commute between an office and a private residence, or any other place that’s not a permanent office
- Are extremely short, for example down the road
- Don’t have an obvious work-related character
- Are private journeys with one or two work-related stops — it’s all about the primary purpose of the trip
Calculating your mileage allowances
It’s important to note that if the company doesn’t cover the full ‘approved amount’, your employees can apply to get Mileage Allowance Relief for the unpaid part.
Keeping track of mileage allowances
If you manage a large number of employees, or your employees frequently use vehicles to travel for work, consider using a centralised platform such as Spendesk to manage mileage allowances and general travel spending.
Employees save time on the road with access to smart payment methods, clear approval processes and digital tracking of receipts and mileage claims.
Back in the office, the finance team stays in control with simple payment reconciliation, integrated accounting and a real-time overview of company spending.
Want to learn more? Read about the smart ways modern CFOs easily optimise travel spending.