Wednesday, 26 March 2008

Go the extra mile

Shropshire employers must take more notice of staff mileage claims to avoid tax difficulties.

Our Employment Law Specialist, John Mehtam, said with such a busy working environment, employers may be tempted to sign the claims without checking them too thoroughly.

“But this is a risky strategy, and could lead to really serious consequences in terms of tax if you don’t follow the rules. Check that the mileage your staff are claiming for is allowable – this covers travel to business meetings, conferences and temporary places of work. But any travel with a personal element, including travel to and from work, will not qualify."

John said the Taxman had approved mileage allowances for employees using their own vehicles for business travel – the flat rate for cars is 40p per mile for the first 10,000 miles in a tax year, and 25p per mile after that. There are separate rates for company vehicles and motorcycles.

All claims should be in writing including records of each journey and its purpose, such as client/supplier name, start point, destination, date and miles travelled.

“If you don’t follow the rules, the employee will be required to pay tax on any excess mileage payments. And the Taxman will assess your company on the sum total of the overpayments too, so you will be charged interest as well. Any false mileage claims will require the staff involved to pay tax on any excess, and this would also be a disciplinary matter."