Business Mileage – Who Can Claim?
If you are an employee, then there are chances that you have used your own vehicle in travelling for business-related activities. Perhaps you have received reimbursements from these travels through your employer or HMRC.
But there are different rules when you are self-employed or you act as the director of your own limited company. Although it is still possible that you can get a reimbursement for that business mileage, however, the process and the records that are required can be very challenging for a lot of new business owners.
Who Are The People That Can Claim Business Mileage?
Business mileage can be claimed by employees as well as company directors. If you have employees in your company, then they can claim reimbursement from you since you are the employer. In case you failed to pay them the exact business mileage or you did not follow the approved rates from HMRC, then they can claim for the difference at the end of the tax year.
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Sole traders can also get the chance to claim for business mileage. The only difference is HMRC prohibits reimbursement made by sole traders who are using a bicycle. This is quite unfortunate for those people who are green-minded or those who are cycle couriers.
The good news is, you are allowed to claim for the costs of purchasing your bicycle as well as its consumables including tyres and other bicycle parts as well as its maintenance. However, if you will be using your bicycle for personal use, then most likely the amount that you can claim will be reduced. In order to learn what you can claim, you should talk to your local tax office or to an accountant.
Do You Know The Amount You Can Claim As Business Mileage?
Typically, it is ideal if you use the approved mileage allowance payments (AMAP) authorized by HMRC when making a claim for your business mileage. For mileage up to the first 10,000 miles, you are allowed to claim 45p per mile, then 25p per mile for the consecutive mileage when you are using a car or van.
These AMAP rates also cover the usual running expenses of your vehicle such as insurance and maintenance. Be sure to keep track of all the business travels that you’ve made using your own car since this will be your proof when filing for a claim. The approved rates per mile authorized by HMRC are the following.
For car/van, it’s £0.45 for the first 10,000 miles, then £0.25 for more than 10,000 miles. When using motorcycles, the rate is £0.24 for the first 10,000 miles, and for more than 10,000 miles, it’s still the same rate £0.24. For bikes, the rate for the first 10,000 miles is £0.20, which is the same for more than 10,000 miles. Unfortunately, sole traders are not allowed to make a claim for business mileage using bikes.
Does Claiming For Business Mileage Require A Proof?
Whether you are an employee or a company director, you can guarantee that you can get a reimbursement if you keep track of the business miles that you have driven. You are also required to submit a log of the dates and locations of your business travel.
How To Compute The Cost For Business Mileage?
It’s really quite simple. All you have to do is multiple the appropriate mileage rate with the business mileage. Be sure to keep track of your mileage on a regular basis so you will know how much you can claim. Using a business mileage claim spreadsheet can help in recording your travels easily. You must be able to create a system wherein you will be able to submit your claim form on a regular basis so you will be paid by the company on a monthly basis.
HMRC will conduct an inspection to make sure that your whole expense claim system is suitable for its purpose. It is important that you should keep all the receipts in order to support your claim. The amount released by the company should also match the amount for reimbursement. So, be sure to keep all those pertinent records whether you are an employee or a company director making a claim for business mileage.
What If Your New Business Does Not Have Funds For Reimbursing Mileage Expenses?
As a brand new business, it is expected that you will have to pay for some expenses even before you have earned some money for the company. With regards to business mileage claims, you have two options.
First, you have to wait for some time before your business can generate some income, then you can accommodate claims. The next option is to use your own working capital that you’ve invested in your company. Then you can use this to pay for the claim. In the company accounts, it will show that the capital is illustrated as a loan from the company director.
My Business Is VAT Registered, What Should I Do?
The recommended amounts for claiming business mileage is based on the advisory fuel rates. Take note that these rates are only applicable to companies that are Standard Rate VAT registered. They can be used in computing the amount of VAT when reclaiming business mileage using a personal vehicle. It is also used in determining the amount that the employers will reimburse their employees who are using company vehicles for their business travels. Conversely, these rates are also used to figure out the amount that employees will reimburse their employers when company vehicles are used for personal travels. These rates are being reviews by HMRC every quarter.
Use Tripcatcher In Claiming Your Business Mileage
It is important to always keep track of your mileage, whether you are making occasional or daily business trips. The good news is you can do this easily by using Tripcatcher. It can precisely record and monitor all your business mileage. Tripcatcher will do all the work for you.
Using the Tripcatcher web app, you can accurately log your mileage. There are also other mobile apps that are designed for iPhones, iPads and Android devices. This is perfect is you are recording mileage while on the go.
Minimize Data Entry
Tripcatcher is something that you will love since it includes a lot of time-saving features such as its capability to create recurring trips if you are having trips on the same location over a certain period of time. All you need to do is input your journey and the days that you will be travelling and Tripcatcher will do the rest.
Claim The Correct Mileage
Don’t know how far you have travelled? No worries, just fill in the to and from postcodes and Tripcatcher together with Google Maps will plot the route and calculate the mileage. If you are using the mobile app, then all you have to do is enable your GPS tracking and the entire process will be automated.