Travel Expenses to Employees

Accounting
1

A few quick accounting questions (not sure if the answer is just as quick mind you).

I’ve got an employee who I pay at an agreed rate of £0.20 per mile travelled for business use.

  1. It doesn’t necessarily cost £0.20 per mile to travel, so what proof do I need to justify this cost, if any, for the satisfaction of HMRC?
  2. I read on the HMRC web site that I can pay up £0.45 per business mile without reporting anything, but further down the page it says any earners above £8,500 I have to report through P11D. So do I have to report it or not?
  3. If business miles don’t come into the £8,500 category, am I correct to assume this would be for food, hotels etc.?

Any / all help appreciated - I just want to get it right!

Thanks in advance

2

You are allowed to pay employees up to the approved amount of MAPs each year without having to report them to HM Revenue & Customs (HMRC) or pay any tax on them. These tax-exempt payments are known as ‘approved mileage allowance payments’ (AMAPs).

Authorised Mileage Rates

Only two types of journey count as business travel:

  • journeys that form part of an employee’s employment duties (such as journeys between clients’ premises by a salesperson)
  • journeys that relate to an employee’s attendance at a temporary workplace

If the MAPs you pay to an employee exceed the approved amount for the tax year, then:

  • for company directors or employees earning at a rate of £8,500 or
    more per year, report the excess amount on form P11D
  • for employees earning at a rate of £8,500 or less per year, report the excess amount on form P9D
        regardless of the employee’s earnings, you have no tax to pay to HMRC

If the MAPs you pay are below the approved amount for the tax year:

  • you have no reporting requirements
  • you have no tax to pay to HMRC
  • your employee will be able to get tax relief (called Mileage Allowance Relief, or MAR) on the unused balance of the approved amount
  • you can make separate optional reports to HMRC of any such unused balances under a scheme called the Mileage Allowance Relief Optional Reporting Scheme (MARORS) - contact your HMRC office if you want to enter the MARORS scheme
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