Almost every company incurs travel costs for business trips and other work-related driving. Especially the latter can quickly stack up when you’re dealing with lots of employees who are constantly hitting the road — and that’s exactly why there are mileage allowances.
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, consider giving them access to a centralised platform for mileage registration. This could help with a more streamlined approach to gathering data, and makes it easier for the administrative department to file tax returns. There are all kinds of solutions for this – mobile apps like MileIQ use GPS to track the exact amounts for regulatory purposes, while a platform like Spendesk can take care of indexing all reimbursements.
Alternative travel and mileage allowances
Spendesk is perfect for managing any travel allowances, boasting a rich feature set that’s perfectly tuned to your company’s needs. Try it for yourself and get started with our free trial today.