Can an employer deduct mileage from an employee?

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Can an employer deduct mileage from an employee? I.e. an employee has done 100 miles return journey of business miles and has set off from home - the employer argues that the mileage that would have been done Home to Office and Office to Home (i.e. 25 miles return journey) should be deducted from the 100 nusiness miles so the only mileage claimable is actually 75 miles. I've been in accounts for 7 years now and this is the first time hearing of an employer doing this and it feels wrong. Please could someone enlighten me of the legalities of this or share your similar experience.

This doesn't seem fair especially if the distance from Home to Client is less than it is from Office to Client.

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By Rammstein1
13th Oct 2022 10:13

This is the triangular mileage basis that was in place up to about 1998. Based on the information supplied, business mileage is 100, the employer will reimburse 75 x 45p and tax relief on the other 25 miles at 45p can be claimed from HMRC.

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Replying to Rammstein1:
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By Paul Crowley
13th Oct 2022 10:24

canx

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Replying to Paul Crowley:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 10:36

The mileage of 100 miles is all business miles, the journey is from Home to Client. The employer argues that they deduct the miles that WOULD have been from Home to Office on a normal day as a standard commute to work. i.e. I travel to the office 25 miles return trip Home to Office and Office to Home on a daily basis as a standard commute (not claimable). On another day I do a round trip (Home to Client and Back Home) to a client which results in 100 business miles. The employer argues that because I have to do the standard 25 miles commute on a daily basis, they deduct that commute mileage from the Business Mileage.

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Replying to R3SIDENT_ACCOUNTS:
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By Mr_awol
13th Oct 2022 10:51

R3SIDENT_ACCOUNTS wrote:

The mileage of 100 miles is all business miles, the journey is from Home to Client. The employer argues that they deduct the miles that WOULD have been from Home to Office on a normal day as a standard commute to work. i.e. I travel to the office 25 miles return trip Home to Office and Office to Home on a daily basis as a standard commute (not claimable). On another day I do a round trip (Home to Client and Back Home) to a client which results in 100 business miles. The employer argues that because I have to do the standard 25 miles commute on a daily basis, they deduct that commute mileage from the Business Mileage.

Seems fair.

If you dont like it, you could always drive to the office and go to the client from there, claiming the office to client to office trips in their entirety and claiming none of your commuting. Of course you may end up spending longer in the car, and doing more miles, particularly if the client is in the opposite direction.

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Replying to Rammstein1:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 10:42

From your post my understanding is that it is legal for the employer to do this deduction and then the employee can submit a Tax Return with the P60 info and then declare the mileage they have not been paid and receive a tax refund? Correct me if I'm wrong.

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By David Ex
13th Oct 2022 10:13

R3SIDENT_ACCOUNTS wrote:

Please could someone enlighten me of the legalities of this or share your similar experience.

Just refer to the employment contract which will reference the employer’s HR policies.

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Replying to David Ex:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 10:37

My question is more linked to the legality of this policy, rather than what the company says in the employment contract.

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By Mr_awol
13th Oct 2022 10:48

I cant see why there would be any doubt over the legality - any more than there would be, say, over a decision to pay less (or more) than the HMRC approved rates. HMRC dont make the rules on mileage claims, they just apply the rules on tax relief/tax due on payments made below or above the tax-free rate and/or subject to exemption (or not, as the case may be).

As David rightly infers, the basis for the claims will normally be in the employment contract or (more likely) the employer's policies/employee handbook/rules.

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Replying to R3SIDENT_ACCOUNTS:
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By HiddenAccountant
13th Oct 2022 10:54

If you're not looking at it from employment contract/policy point of view then I don't think the employer 'legally' has any obligation to pay any mileage. I can only see it as compulsory if it were in the employment contract and this may provide the exact details on how the mileage figure is arrived at

The rate of £0.45 is the value HMRC have allowed employers to pay employees tax free. It does not put any obligation on the employer to do so. They may choose to pay £0.10 per mile.

Whilst I found it petty from my employer for introducing this year the reduction in the milage claim by the daily commute it does make sense to me.

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Replying to R3SIDENT_ACCOUNTS:
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By Leywood
13th Oct 2022 12:05

An employment contract covers the legalities!!!!!

Why do you flip flop between talking about yourself in the 1st and 3rd person?

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Replying to Leywood:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 13:19

Brave of you to assume it's about me!!!

I don't travel for the business - I'm trying to look out for the employees that do!

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Replying to R3SIDENT_ACCOUNTS:
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By Leywood
13th Oct 2022 13:38

Brave???? Seriously!

You keep using the word ‘I’.

English and grammar are important.

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By Mr_awol
13th Oct 2022 10:40

I'm not entirely sure why/how this is a surprise to you - it is the system used by every employer i have ever had (ranging from major employers down to very small firms) and is our policy here. The mileage reimbursed is the additional cost incurred. So, if a staff member normally commuted ten miles, and they go to a client five miles from home without coming to the office, they technically get nothing* (but they do save half their normal commute time/cost).

*Obviously we would pay for parking etc.

As an extreme example, what if a staff member lived 50 miles away and the client was 1 mile from their workplace. Should they be able to claim their commuting just by avoiding coming to the office, even if they had to drive past it? Doesn't sound fair on the employer to have to shell out £45 for what is essentially a 2 mile round trip if the staff member came to work first.

I have seen some smaller clients and OMBs use the 'any business trip qualifies in full' approach but I'd say its less common for staff claims as the 'additional distance travelled' approach is fairer and makes more sense logically.

I'm interested as to why you feel it doesn't seem fair? I can think of a couple of obscure reasons - such as:
- Employee normally cycles, but has to bring car to carry files/etc - we would pay in full
- Employee normally car shares, so the entire journey is 'extra' - we would pay in full
- Employee normally gets the train, and has a monthly/annual season ticket, so the entire (car) journey (less normal drive to station if they do that) is extra - doesn't apply to us but i imagine we would pay travel less any normal commute miles to station.

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Replying to Mr_awol:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 10:55

This is my first time seeing this - since leaving education in 2016, every company I have worked paid full mileage regardless of the journey distance, that's why it came to me at a surprise. Especially in the fact that this is not a standard commute to a one place of work which I appreciate is not claimable, but as soon as an employer requires you to travel to a different site of work which is not the typical place of employment the employee is eligible to claim the mileage as an expense.

My follow up would be, if the business mileage is not paid by the employer using the above-mentioned policy. Would you agree with me if I were to say that the employee could submit a tax return and claim the extra mileage that has not been paid as a tax refund (obviously if the cost is material to the person)

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Replying to Mr_awol:
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By rememberscarborough
13th Oct 2022 11:45

On the other side if the client is based a mile from the employee's home what would the employer expect to pay? The employer can't have it both ways so I would usually expect to pay mileage from office to client regardless of where the employee is travelling from. Some you win and some you lose...

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Replying to rememberscarborough:
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By Mr_awol
13th Oct 2022 12:36

The employer would expect to pay no mileage in that situation. The employee is onto a winner as they have saved commuting time/cost and the employee has neither gained nor lost as there has been no expense for them to cover.

If you would pay mileage in those circumstances how would you treat it for tax purposes?

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By Tax is always taxing
13th Oct 2022 10:41

Our policy was to pay the mileage clam being the lower of the actual mileage incurred or the mileage from the office. But as suggested above, this was clearly stated in the employee handbook. What does yours say?

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Replying to Tax is always taxing:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 11:09

That makes sense to me, and I think that's fair. It's just that if the business has enough profit to dish out and pay mileage in fullfull, my thought would be - why wouldn't it? Pay mileage in full and keep the employees happy. It gives the company tax relief, and the morale of the employees is up since they get an extra £100

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Replying to R3SIDENT_ACCOUNTS:
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By David Ex
13th Oct 2022 11:42

R3SIDENT_ACCOUNTS wrote:

It gives the company tax relief, and the morale of the employees is up since they get an extra £100

Business mileage is not (normally) part of a bonus scheme. You don’t want to encourage unnecessary journeys by paying “excessive” travel expenses.

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By DJKL
19th Oct 2022 15:41

In fact if your business has any green credentials you wish to discourage.

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By R3SIDENT_ACCOUNTS
13th Oct 2022 11:04

I think I got my answers

- Employers don't HAVE to pay mileage if they don't want to (although I think most of us can agree it is a bit petty)
- They can do Business Mileage minus Regular Commute (as it turns out this has been done before)
- If the expense is material to the employee, they can submit a tax return to claim tax back on this

Feel free to add to

Thanks everyone :)

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Replying to R3SIDENT_ACCOUNTS:
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By Mr_awol
13th Oct 2022 12:29

Would most of us actually agree that it's petty not to pay employees for their standard commute? Or is that merely your opinion and you are trying to project it onto the rest of us without any idea whether we agree or not?

I certainly wouldn't agree, and suspect the majority of employers wouldn't.
Certainly in terms of a 25 mile commute like you mention it is hardly petty to deduct it, although i agree if a staff member lived half a mile from the office it would be petty - or they lived a mile away and were doing a 300 mile round trip on business.

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Replying to Mr_awol:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 12:59

You're right it is my opinion - and I'm looking at it from the employee's perspective - that's why I would say it's petty if an employer that wouldn't pay their employees mileage - especially if the employees are on a low salary.

And by the way, I didn't come here to debate what's petty - i came here to learn and get an answer to my question.

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Replying to R3SIDENT_ACCOUNTS:
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By Mr_awol
13th Oct 2022 13:25

That's fine. I was just querying the use of "i think we can all agree" when i suspect the majority might not agree. As for debating what is or isn't petty, I'm only responding to an assertion you made (on behalf of us all it seems) that it was.

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Replying to R3SIDENT_ACCOUNTS:
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By Comptable
19th Oct 2022 15:33

Why doesn't the employee get the bus (notional bus) on the days he/she goes to the client? And deduct the bus fare>
Or get a lift or perhaps hitch hike/

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By Tax Dragon
13th Oct 2022 11:11

Tax relief on 25 miles at 45p at 20% is £2.25.

(Hey - I'm putting my neck on the line here - if I've got that wrong I'll have to quit Aweb immediately... and please don't tell my partners!)

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By R3SIDENT_ACCOUNTS
13th Oct 2022 11:26

Looks right to me :) - and now add other miles that aren't being paid and then times that by 52 weeks - each employee does significant mileage during the year and over the year the tax relief could become into the hundreds of pounds.

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Replying to R3SIDENT_ACCOUNTS:
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By Tax Dragon
13th Oct 2022 11:36

In that case the applicable rate might be 25p, rather than 45p.

And if the employer is paying 45p on all the 'paid' miles, you could even end up with tax to pay (though surely that should be deducted at source?)

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Replying to Tax Dragon:
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By Mr_awol
13th Oct 2022 12:50

I'd have thought it was a P11D item isnt it? I rarely see it nowadays but am sure there is (or used to be) a specific box for excess mileage payments.

(not sure how/if it gets picked up for E'ees NIC though)

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By tom123
13th Oct 2022 11:49

So, my office is 20 miles north.
My colleague lives next door.

My client is 10 miles south - 30 miles from the office.

Should my employer save having to pay any mileage charge by sending me to the client, rather than sending my colleague?

What about if the employer charges the client a fee to cover travelling..

One thing is for sure, this is one way to annoy your staff - who will leave sooner than they previously would.

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Replying to tom123:
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By Tax Dragon
13th Oct 2022 11:55

The rise of homeworking is changing the dynamic. But yes the employer should save costs and the environment by sending you, if you are equally capable of doing what's required. (And employees ought to [be expected to] plan work to minimise journeys, for the same reasons - so eg do the client visit on a WFH day.)

In my idealised, rose-tinted world, employers and employees bat for the same team. (One for DJKL... And maniacs don't blow holes in bandsmen by remote control...)

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By R3SIDENT_ACCOUNTS
13th Oct 2022 13:14

Thats the thing; in order for the employees to fulfil their duties of the business they must be on site of the clients - this type of work cannot be completed from home or the office. So, it's a requirement for the employees to drive and have the business insurance etc.

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Replying to R3SIDENT_ACCOUNTS:
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By Leywood
13th Oct 2022 13:18

For which you are being remunerated.

So what exactly is your issue?

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By R3SIDENT_ACCOUNTS
13th Oct 2022 13:24

But the employees are not being remunerated for the full mileage - that was my question.
I've never seen that before from my previous employments and that why I wanted to check up on this with other accountants.

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Replying to R3SIDENT_ACCOUNTS:
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By Leywood
13th Oct 2022 13:40

Why on earth do you think they should be remunerated for a commute.

You’ve been given answers, even been given suggestions for your staff, no idea why you are still saying it’s an issue.

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Replying to tom123:
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By Mr_awol
13th Oct 2022 12:48

I'm still not sure why employees would feel aggrieved at not being paid for ordinary commuting. Certainly I've never once questioned it in any of my employments because it makes perfect sense to me. If an employee drove past their place of work and tried to include their commute in a mileage claim i'd put that firmly in the 'taking the [***]' category if im honest.

What i find much more interesting, and what i have never seen in any policy, is what happens if you get a stone chip, puncture, have an accident whilst on a business trip - should the employer pay the excess/repair costs/etc. On the one hand a puncture or stone chip can occur at any time and is almost a risk you have to accept when driving. On the other hand, perhaps if they hadn't been driving down that road, it wouldn't have happened.

Should it make a difference if they live in a town but visit a client in the countryside and whilst driving down a potholed road they damage their suspension, or park up somewhere near a client and their tyre/car gets vandalised? I think those are situations where they probably should be able to reclaim the cost from their employer, although I'm not sure how that would work in tax terms.

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By Tax Dragon
13th Oct 2022 13:08

Don't you need insurance that covers business travel to do business travel? Maybe that's why?

On the 'moral'/petty points, I'd turn the example around. It's an audit client and you will spend all day there. Were you not at the client's, you would be in the office. As it happens, the client is next door to the office. You could park in the office carpark and walk from there. 'Should' you be paid for driving to the office? What if you parked in the client's carpark? 'Should' you be paid now?

What's needed here is an expenses policy, to avoid arguments. Most employers will have one. Most (affected) employees will know what it is.

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Replying to Tax Dragon:
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By Mr_awol
13th Oct 2022 13:40

To be honest, it adds such a tiny amount of money to the insurance policy to add business cover that I'd ignore it - although you may have a good point in the (unusual) event that i lived in a corner of the country with my office very far away, so pretty much every client visit i did, was less than my commute. Potentially that might leave me never able to make a single mileage claim, and with the added cost of business cover (although in such an event i believe the employer could make a payment equal to the annual insurance, it would be free from tax, and both parties would end up in a fair position).

Your audit client example I would say that as an employer i would not expect a staff member to claim in those circumstances - as set out in my post of 10:40 when i floated the same scenario (albeit with different mileages). Any employee trying to claim in such circumstances may find themselves in the position of having to get routes and claims authorised in advance, since they clearly cant be trusted to make an honest claim themselves.

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Replying to tom123:
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By R3SIDENT_ACCOUNTS
13th Oct 2022 13:09

This is what I'm saying, in my scenario with your given example, you wouldn't get any mileage expenses.
Considering the business would save 20 miles already, so why reduce morale and annoy your employees when can just pay them the 10 miles. It would be even more annoying and frustrating if the business charges the client for travel and doesn't re-imburse the employee for it

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Replying to R3SIDENT_ACCOUNTS:
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By tom123
13th Oct 2022 13:34

Charging the client for mileage that was then not actually incurred by re-imbursing the employee is a serious p!ss take..

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Replying to R3SIDENT_ACCOUNTS:
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By Tax is always taxing
13th Oct 2022 14:24

As a client I would be annoyed if a firm billed me for 100 mile trip if their premises was only 75 miles trip from their offices.
Why does it reduce morale when it's perfectly normal practice?

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Replying to Tax is always taxing:
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By Mr_awol
13th Oct 2022 17:51

Because todays employees are so self entitled that their morale is dented if they don’t get to cream a profit from their employer at every opportunity, would be my guess

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By Sandnickel
13th Oct 2022 19:31

What an odd post!

The mileage for a commute is not an allowable expense. The commute is something you agree to when you accept the job.

It is reasonable to be paid for any excess mileage over and above the normal journey you have agreed to undertake (your commute).

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By Hugo Fair
13th Oct 2022 19:34

I'm stunned! I go away for a day and, on a perfectly simple question, all the respected contributors who normally decry wandering off piste into philosophical zones are deep in the snow!

The 'fault' lies with OP for phrasing the question as "Can an employer deduct mileage from an employee?"
An emotive interpretation that isn't backed up by any subsequent details.
Nothing is being deducted ... a claim is being rejected/adjusted and, as everyone agrees, that is fine so long as it is line with employment T&Cs/handbook.

1. The employer can pay as little as it likes (including £0) towards any costs incurred by an employee - there is no mandation to pay anything unless a contract specifies otherwise.
2. HMRC has various schemes/rates that determine, in differing circumstances, how much the employee can treat as free-of-tax (or a deduction from taxable earnings) - which can be spread over any contribution that the employer chooses to make and/or the taxpayer's annual tax settlement.

Everything else is just how each of us *feel* about meanness vs over-generosity.

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By adam.arca
15th Oct 2022 08:48

Late to the party on this one but I would just like to say for the record that I’m with pretty much every response on this:

* Completely disagree that what the OP is asserting as “normal” is any such thing

* Completely disagree that any variation from this normal is somehow amoral or petty or both

* Completely disagree that having a rational expenses policy which makes sense to the meanest intelligence is in any way demotivating for staff (they simply need to have it properly explained to them)

The OP is clearly young and I can understand there’s some confusion because of HMRC’s bonkers decision years back to change the basis of acceptable mileage claims (as referenced in the very first response) in order to “make it simple” so the learning issue for the OP here is to realise there’s a vast gulf between normal business practice based on common sense and HMRC’s interpretation of anything.

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