Mileage claim help

Deducting home to base mileage and HMRC rules on taxable travel

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Hi,

I work for a very large company. Their travel policy states that when claiming travel mileage expenses, employees should first deduct their normal home to workplace mileage from thier claim. This seems fair and consistant with many other employers. 

HMRC guideance on taxable mileage states that when an employee travels to "temporary workplace" i.e less than 40% of the working week and not part of a set, regular pattern, the whole journey mileage can be claimed.

So for example, an employee normally works at location A which is 15 miles from thier home. They cannot claim for travel here because it is a commutable journey. One day the employee is required to attend a one off meeting at location B which is 25 miles away.  Our policy would allow the employee to claim 10 miles however the HMRC guidelines seem to indicate that the employee can claim tax relief on the full 25 miles. 

For refernce we pay 45p per mile

Please can you advise on what can be claimed in these circumstances. 

Many thanks in advance for your help  

Replies (40)

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By Paul Crowley
21st Jun 2024 14:52

It is a company decision that does not seem unreasonable.
45p per mile for the extra costs.
Is it really worth the aggravation to look for such small sums?

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By Rammstein1
21st Jun 2024 14:53

Claim 10 miles from employer and tax relief on balance from HMRC.

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Replying to Rammstein1:
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By FactChecker
21st Jun 2024 15:04

... which of course won't add up to 45p/mile being tax-free.

EDIT: as now expounded in the next post.

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By Not Anonymous
21st Jun 2024 14:59

I would say the claim for tax relief is,

50 (miles) x 45p = £22.50
Less £9.00 reimbursed
= Net amount on which tax relief is use £13.50

If this was the only claim in a given tax year and the employee is a basic rate payer the tax refund at stake is likely to be less than £1 once the tax owed under PAYE (rounding of tax code allowances) is factored in!

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By ChrisMM12345
21st Jun 2024 15:00

Thanks for the replies.

If the company only pays the mileage over the normal home to base mileage, how can the employee claim back tax relief on on the remaining?

Also is there a risk if the HMRC audits our expenses and we have been deducting home to base mileage for all journeys?

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Replying to ChrisMM12345:
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By FactChecker
21st Jun 2024 15:07

"company policy seems to contradict the HMRC guidelines" ...
... No.

Company policy is company policy (so long as that doesn't break some law, which this doesn't).
Whereas HMRC guidelines aren't guidance for ER's to implement - just guidance on how to treat certain payments for tax.
So there's no contradiction - just different aspects.

Thanks (6)
Replying to ChrisMM12345:
Danny Kent
By Viciuno
21st Jun 2024 15:08

The HMRC guidance is with regards to tax free sums that an employee can receive rather than "you must/should pay x".

IMO nothing contradictory.

The rates are quite reasonable. I get around 50m/g. If I was to travel 50 miles at 45p I'd get £22.50. I'd be paying £7.50 for fuel for that gallon of fuel (or not far off it). Unless they are driving a tank, they'll be quids in.

I understand that this 45p is to cover all running costs, and wear and tear, but assuming these are not regular work trips then it doesn't seem unreasonable to stick to the policy you have.

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Replying to ChrisMM12345:
By Ruddles
21st Jun 2024 15:11

You are conflating company policy with tax rules, which are two different beasts. There is no contradiction. The tax rules stipulate how much tax relief the employee is entitled to. This is 45p/25p per business mile. Less how much the employer is prepared to reimburse the employee, based on whatever rules it wants to apply.

Take another example, where the employer would in fact be prepared to reimburse all of the mileage in question, but at only 35p per mile. Would you still be arguing that company policy contradicts HMRC guidelines?

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By ChrisMM12345
21st Jun 2024 15:44

Thanks all for your replies,

So to sum up...

Our organisation can decide to pay what employee mileage we like and for what journeys?

The HMRC guidelines are only there to say what mileage claims are taxable and not what employees can claim for?

So using the above example, it doesn't matter what HMRC say because we do not pay the full journey mileage anyway (only the distance minus home to base).

If we did however decide to start paying the full distance mileage, only then would we need to consider the HMRC guidelines and allow tax relief on the full distance?

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Replying to ChrisMM12345:
By Ruddles
21st Jun 2024 16:20

Broadly speaking, you are correct. However:

Your organisation can decide how much to pay for what journeys. Tax treatment then follows from that.

Legislation, not HMRC guidelines, dictates the tax treatment.

Whether or not you and the employees need to consider the guidelines (sic) will depend on the mileage and the amounts involved. If, for example, the company is paying 45p for all 'business' mileage, even if restricted as above, if that mileage were to exceed 10,000 miles it is possible that a chargeable benefit could arise. Dangerous to assume that no benefit arises just because the employer is not paying for all miles.

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Replying to Ruddles:
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By ChrisMM12345
21st Jun 2024 16:50

Very helpful, thank you.

I should have also mentioned that we pay 45p up to 10,00 miles and then 25p after that.

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Replying to Ruddles:
RLI
By lionofludesch
21st Jun 2024 19:26

I would put it as employer can pay what he likes, up to the 45/25p limit. Employee is free to work out what HMRC would allow and, if that's more than what the employee has received, he can claim the excess as a tax deduction.

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Replying to lionofludesch:
By Ruddles
21st Jun 2024 20:13

I would put it as the employer can pay what he likes.

Any difference, +ve or -ve, between that and the calculated 45p/25p amount will give rise to, respectively, a chargeable or a claimable amount.

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By Tax Dragon
21st Jun 2024 20:40

There is another caveat. Say the temporary workplace is 7.5 miles. Employer doesn't pay anything. Tax relief could be on 15x45p.

So far as above.

Caveat: if the temporary workplace is en route to the permanent one, the journey there may for practical purposes be substantially ordinary commuting. If it is, s338(2) seems to
bar a deduction.

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Replying to Tax Dragon:
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By FactChecker
21st Jun 2024 23:02

Which is why (in your scenario) I've seen the EE drive from home -> permanent workplace (no reclaim), and then immediately (without stopping) from permanent workplace -> temporary workplace ... before returning to base.

That way the 15 miles are eligible (which compensates EE for the diversion paid for out of their pocket) ... and the environment (and HMRC) are the loser!

Idiotic - but it used to be commonplace (and only wrong when the claim was based on the above - despite the reality being your original scenario).

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By ChrisMM12345
25th Jun 2024 11:37

Hi, so a further couple of questions for clarification (based on company policy to deduct home to base mileage for any travel from home to another location).

If an employee's normal home to work is 10 miles, they travel from home to a "temporary workplace" which is 30 miles away. The employer would pay the employee 40 miles for a round journey after deducting home to base mileage. The employee is able to claim tax relief on that payment as per HMRC guidelines. What about the other 20 miles? Does this just become void because the employer has chosen not to pay the normal commuting element of this journey (after deducting home to base mileage).

If the same employee travels from home to another location which is not considered temporary and 20 miles away. The employee is able to claim 20 miles for a round trip (after deducting home to base mileage). Should employees be able to claim this tax free even though HMRC guidelines say they shouldn't or does this not matter because an employer can choose what travel claims to reimburse?

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Replying to ChrisMM12345:
By Ruddles
25th Jun 2024 12:11

In the first scenario, the employee is entitled to claim relief on the full business mileage incurred (60 miles) less any amounts reimbursed by employer. In your case, assuming 45p applies across the board, tax relief on 60 x 45p, less 40 x 45p.

In the second scenario, it is likely that none of the mileage will qualify as eligible business mileage. If the employer pays mileage for any element of this it is likely to be taxable.

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Replying to Ruddles:
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By ChrisMM12345
25th Jun 2024 12:34

Thanks,

All our employee mileage is paid at 45p/25p and paid as tax free by our 3rd party payroll once employees submit a claim alongside their monthly salary . So in the first scenario how would employees get their tax relief on the remaining 20x 45p? As an employer can we opt not to pay this element of a journey?

In the second scenario - because we off set mileage by deducting home to base mileage surly this makes sure we are only paying the non commuting aspect of a journey.

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Replying to ChrisMM12345:
RLI
By lionofludesch
25th Jun 2024 12:46

ChrisMM12345 wrote:

Thanks,

All our employee mileage is paid at 45p/25p and paid as tax free by our 3rd party payroll once employees submit a claim alongside their monthly salary . So in the first scenario how would employees get their tax relief on the remaining 20x 45p? As an employer can we opt not to pay this element of a journey?

He needs to write to HMRC.

Quote:

In the second scenario - because we off set mileage by deducting home to base mileage surely this makes sure we are only paying the non commuting aspect of a journey.

No. This second site is his base. It's possible to have more than one.

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Replying to ChrisMM12345:
By Ruddles
25th Jun 2024 12:50

First scenario - employer can opt to pay whatever it wants on whatever element of the journey it wants (subject to what contract with employee says). It is not governed by tax rules, the implications of which follow on afterwards. Employee needs to contact HMRC directly for the relief.

Second scenario. If the workplace is not a temporary workplace then, by definition, it would appear to be a permanent workplace. In which case there is no non-commuting element of the journey.

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Replying to Ruddles:
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By ChrisMM12345
25th Jun 2024 13:00

Thanks very much for your help.

It's just all very confusing that we have a policy to deduct home to base mileage from all mileage claims (which are automatically all paid as non taxed) for journeys beginning at home, when this appears to be against HMRC guidelines.

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Replying to ChrisMM12345:
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By FactChecker
25th Jun 2024 15:02

Despite an immense amount of help (from knowledgeable people with greater patience than me), you are STILL banging on about "this appears to be against HMRC guidelines"!

Did you not understand my post last week (of 21st Jun 2024 at 15:07) above?

Please seek professional guidance if you are unable to understand this central point ... as otherwise you are just going round in circles of incomprehension!

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Replying to ChrisMM12345:
RLI
By lionofludesch
25th Jun 2024 15:06

ChrisMM12345 wrote:

Thanks very much for your help.

It's just all very confusing that we have a policy to deduct home to base mileage from all mileage claims (which are automatically all paid as non taxed) for journeys beginning at home, when this appears to be against HMRC guidelines.

It's not against their guidelines. They don't have guidelines. They have rules about what the employee can claim as tax relief. Which is not the same thing at all.

If you wanted to pay the fella £10 a mile for his home-to-work journeys to a permanent workplace every day, that's fine by HMRC.

But it wouldn't be tax-free.

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Replying to lionofludesch:
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By ChrisMM12345
25th Jun 2024 16:52

Ok thanks, I get that employees can decide what travel they claim for and how much they pay. However where is it determined whether a journey claim is tax free or taxable? I understand the HMRC "rules" however employees submit claims for their travel and it's all paid tax free along with their salary every month?

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Replying to ChrisMM12345:
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By lionofludesch
25th Jun 2024 17:01

ChrisMM12345 wrote:

Ok thanks, I get that employees can decide what travel they claim for and how much they pay. However where is it determined whether a journey claim is tax free or taxable? I understand the HMRC "rules" however employees submit claims for their travel and it's all paid tax free along with their salary every month?

[sigh]

No. That's not necessarily so.

Though it often is.

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Replying to ChrisMM12345:
By Ruddles
25th Jun 2024 17:09

ChrisMM12345 wrote:
employees submit claims for their travel and it's all paid tax free along with their salary every month

That may or may not be correct. Presumably, as is normally the case, the employer will have satisfied themselves that the claim is one for legitimate business travel. If on the other hand they are paying out all claims willy-nilly without any form of check there is the possibility that there could be some non-business (ie taxable) mileage involved.

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Replying to Ruddles:
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By ChrisMM12345
25th Jun 2024 17:19

When you are a very large public sector employer with hundreds of journey claims it's not possible to check every single claim. I guess this is why some employers off set claims by deducting home to base mileage to reduce the risk and help to ensure only business mileage is claimed and therefore not taxed.

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Replying to ChrisMM12345:
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By Leywood
25th Jun 2024 17:33

That is an utterly ridiculous comment to make and if anyone working in the public sector believes that is clearly one reason why the public sector is in such a mess.

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Replying to ChrisMM12345:
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By lionofludesch
25th Jun 2024 18:08

ChrisMM12345 wrote:

When you are a very large public sector employer with hundreds of journey claims it's not possible to check every single claim. I guess this is why some employers off set claims by deducting home to base mileage to reduce the risk and help to ensure only business mileage is claimed and therefore not taxed.

It doesn't though, does it?

As pointed out to you earlier in the thread. You can have a second permanent workplace. It might be nearer or farther away from your home. The travel cost is still not allowable either way.

This has been a pointless exercise for you. You've learned nothing.

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Replying to ChrisMM12345:
By Ruddles
25th Jun 2024 15:15

For the last time, and echoing others, this is NOT against HMRC guidelines (although I can do nothing about it appearing to be so in your mind). HMRC "guidelines" simply set out the tax position of certain payments. They do NOT dictate what the employer may or may not pay its employees. If it wanted to, it could pay for only the last mile of any journey, at a rate of £999 per mile. Or it could pay for EVERY mile, at a rate of 0.00001p per mile. The tax consequences will be what they will be. Or, it might even choose to pay for ALL business mileage at a rate of 45p/25p (including the usual 'home to base' mileage). But if it chooses to exclude the 'home to base' mileage that is entirely up to the employer, and has nothing - I repeat, nothing - I'll say it again, nothing - to do with HMRC's guidance on the tax treatment.

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Replying to ChrisMM12345:
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By Paul Crowley
25th Jun 2024 17:11

IT IS NOT AGAINST HMRC GUIDLINES
I would like to say that as many times as possible
HMRC merely give guidelines as to the maximum permissible tax free expense that can be paid
Your company has a fair policy which is below that tax free maximum.

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Replying to Paul Crowley:
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By ChrisMM12345
25th Jun 2024 17:24

So how is paying a tax free mileage claim to an employee who claims a journey to a location considered not to be temporary not against HMRC guidelines?

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Replying to ChrisMM12345:
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By lionofludesch
25th Jun 2024 17:28

ChrisMM12345 wrote:

So how is paying a tax free mileage claim to an employee who claims a journey to a location considered not to be temporary not against HMRC guidelines?

There are no guidelines.

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Replying to ChrisMM12345:
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By FactChecker
25th Jun 2024 18:08

"So how is paying a tax free mileage claim to an employee who claims a journey to a location considered not to be temporary not against HMRC guidelines?"

Fer cryin' out loud!!!!!!

1. ER paying something without deducting tax from it doesn't make it 'tax-free'.
2. Legally the default for all payments by ER is that they are taxable UNLESS there is a specific bit of legislation that makes a particular payment (with regard to all the circumstances) able to be paid 'tax-free'.
3. If an ER makes a payment that (wrongly) fails to have tax deducted, then they may be deemed to have failed to operate PAYE correctly ... BUT, even if so, that still leaves the EE liable for paying the missed tax.
4. The only 'guidelines' (in the context to which you refer) are those intended to help an ER to operate PAYE correctly ... BUT, as others have said several times, that has no impact on what the ER decides to pay the EE.
5. Being paid via PAYE doesn't guarantee that you've paid the correct amount of tax for the year .. it is simply a means of deducting an approximation of what you are likely to owe at year-end, before you've had a chance to spend it.

All the above statements are, as professionals will know, over-simplifications (with lots of curious exceptions not mentioned) BUT *might* just set you on the path to understanding.
If not, please don't come back as the sensation of banging one's head against a brick wall is getting painful!

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Replying to FactChecker:
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By lionofludesch
25th Jun 2024 18:17

FactChecker wrote:

If not, please don't come back as the sensation of banging one's head against a brick wall is getting painful!

I'm enjoying the debate, actually.

Though it's a little one-sided.

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Replying to lionofludesch:
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By FactChecker
25th Jun 2024 18:24

Never had you down as a ma so chist (apparently a forbidden word)!
Anyway I was wondering how long before Ruddles catches the scent of OP's spoor ...

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Replying to lionofludesch:
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By Paul Crowley
25th Jun 2024 19:19

Not really a debate
More a demonstration that some horses prefer thirst over drinking, no matter how many water type things are offered.

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Replying to ChrisMM12345:
By Ruddles
25th Jun 2024 18:58

Please stop banging on about HMRC guidelines. But if an employer is paying an employee a mileage allowance for non-business travel without applying proper PAYE treatment then they’re likely to be in breach of tax legislation.

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Replying to Ruddles:
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By Tax Dragon
25th Jun 2024 20:30

Ruddles wrote:

if an employer is paying an employee a mileage allowance for non-business travel without applying proper PAYE treatment then they’re likely to be in breach of tax legislation.

^This.

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Replying to Paul Crowley:
RLI
By lionofludesch
25th Jun 2024 17:28

Paul Crowley wrote:

IT IS NOT AGAINST HMRC GUIDELINES

[chuckle]

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