Anthony Tete

Many employees regularly find themselves on the move, whether it’s visiting clients, attending meetings, or simply commuting to different offices.  
 
With such mobility comes the inevitable cost of transportation, and for many, mileage reimbursement becomes a vital aspect of their employment benefits.  
 
But how does mileage reimbursement work in the UK, you may ask? Read on to find out.

What exactly is mileage reimbursement?

Mileage reimbursement is a way to pay back your employees for using their own cars for work. It covers things like fuel, maintenance, insurance, and general wear and tear. Basically, it’s a way to help with the costs they run up while driving for work.

How does mileage reimbursement work? 

In the UK, mileage reimbursement is often based on a predetermined rate per mile travelled. This rate is set by HM Revenue and Customs (HMRC), and it’s designed to cover the average cost of using a personal vehicle, including fuel, maintenance, and depreciation.
 

The HMRC-approved mileage rates for cars are as follows:

• 45 pence per mile for the first 10,000 miles in a tax year 

• 25 pence per mile for each additional mile over 10,000

For motorcycles, the rate is 24 pence per mile, and for bicycles, it’s 20 pence per mile.

These rates are subject to change, so it’s essential that you keep up with the latest guidance from HMRC.

How to calculate mileage reimbursement

To calculate mileage reimbursement, your employees need to multiply the number of miles travelled for work by the applicable rate per mile.  
 
For example, if your employee drives 100 miles for work in a given month, they would be entitled to £45 in reimbursement (100 miles x 0.45 pence). 

How to reimburse your employees

You can pay back employees either through your payroll system or via direct payments.

When using payroll, you incorporate the mileage reimbursement into the employee’s regular pay cycle, ensuring it is clearly itemised on their payslip.

Direct payments can be made outside of the payroll, typically via bank transfer or a company-issued cheque. 

Are there any tax implications?

Mileage reimbursement is typically tax-free, as it’s considered a reimbursement of expenses rather than income. However, there are exceptions, such as when the reimbursement exceeds the HMRC-approved rates or when an employee receives a cash allowance in lieu of reimbursement. In such cases, the excess amount may be subject to income tax and National Insurance contributions.

What responsibilities do you have?

You have a responsibility to ensure that your mileage reimbursement policies comply with HMRC regulations.  
 
This includes: 
 
– Using the approved mileage rates 
– Maintaining accurate records 
– Providing clear guidance to your employees.  
 
Failure to do so can result in penalties and legal liabilities. 

FAQs

Are all UK employees eligible for mileage reimbursement?

Not everyone is eligible for mileage reimbursement in the UK. Generally, you must meet the following criteria:

• You must be using your own vehicle for work-related travel. 

• Your employer must require you to travel for business purposes. 

• You must keep accurate records of your mileage, including the date, destination, and purpose of each trip.

Employees who are eligible for mileage reimbursement typically include sales representatives, delivery drivers, and those who travel between different work locations as part of their job. 

What do UK employees have to do to claim mileage reimbursement?

If you’re eligible for mileage reimbursement, you’ll need to keep detailed records of your business mileage. This includes maintaining a mileage log or using a mileage tracking app to record each journey you make for work purposes. Your mileage log should include the following information:

• Date of the journey 

• Starting location and destination 

• Purpose of the trip 

• Number of miles travelled

Once you’ve accumulated business mileage, you can submit a mileage claim to your employer. This typically involves completing a mileage expense form and attaching your mileage log as evidence. Your employer will then process your claim and reimburse you for the approved mileage. 

Accurate mileage claims guaranteed with Capture Expense

With the Capture Expense app, your team can raise, submit, and approve vehicle expenses anytime, anywhere, streamlining the way your organisation manages spend. Book your personalised demo now and never miscalculate mileage claims again! 

It doesn’t matter how big your company is or how many employees you have, if you provide company-owned vehicles for personal use, you must stay informed about car fuel benefits.

We will give you everything you need to know from what the car fuel benefit is, to the 2024/25 rates and how to report car fuel benefit to HMRC.

Fasten your seatbelts and let’s get started. 

First things first, what is a car fuel benefit?

To put is simply, the car fuel benefit is applicable to UK taxpayers who use their company car for personal use and don’t pay for the fuel themselves. 
 
It’s also worth noting that normal commuting is classed as personal use for company car fuel benefit purposes. 

What are the company cars and vans rates for 2024/25? 

The government announced that it will maintain the van benefit charge as well as the car and van fuel benefit charges at the current level for 2024/25.   

 

Charge	Rate
Van benefit charge	£3,960
Van fuel benefit charge	£757
Car fuel benefit charge multiplier	£27,800

 

What are HMRC’s advisory fuel rates for company cars in 2024?

These are the fuel rates set by HMRC for company cars, starting from 1 March 2024:

Diesel 

Engine size	Diesel — rate per mile
Up to 1600cc	12p
Between 1601cc and 2000cc	14p
Over 2000cc	19p

 Petrol 

Engine size	Petrol — rate per mile	LPG — rate per mile
Up to 1400cc	13p	11p
Between 1401cc and 2000cc	15p	13p
Over 2000cc	24p	21p

 Electric

Electric — rate per mile

9p

 Hybrid

For advisory fuel rates, hybrid cars are considered either petrol or diesel vehicles. 

Do HMRC regularly update their fuel rates? 

HMRC updates the advisory fuel rates quarterly to account for fluctuations in fuel costs. These updates occur on the following dates:

• 1 March 
• 1 June 
• 1 September 
• 1 December 

How to report car fuel benefits to HMRC 

Your reporting options

1. P11D Form:

Submit this form at the end of the tax year, along with other benefits.

2. Payroll:

Process the car fuel benefit through payroll, deducting tax in real time.

Important update

From 2026, payrolling benefits will become mandatory.  
 
This means that if you are currently using P11D forms you should consider switching to payroll processing now to stay ahead of the change. 

Tax and Class 1A National Insurance Contributions on car fuel benefits

Your people must pay tax on any car fuel benefit they receive. The taxable value is calculated using HMRC’s appropriate percentage, which considers the car’s CO2 emissions. Cars with lower emissions are assigned a lower percentage, whereas those with higher emissions receive a higher percentage, varying from 2% to 37%. 
 
Your company also has contributions to make. You’ll need to pay Class 1A National Insurance Contributions on the value of the car fuel benefit provided to your people (currently at a rate of 13.8%). 

What method is used to calculate the fuel rates? 

Here’s a brief explanation of how HMRC calculates their fuel rates: 

1. Mean MPG calculation: HMRC starts by determining the mean miles per gallon (MPG) based on manufacturers’ data. This figure is adjusted to reflect the distribution of specific models sold to businesses.
    
2. Applied MPG adjustment: the mean MPG is then reduced by 15% to account for real-world driving conditions, recognising that actual fuel efficiency is often lower.
    
3. Fuel price data: HMRC sources the petrol prices from the Department for Business, Energy, and Industrial Strategy, while LPG prices are taken from the Automobile Association website.
    
4. Rate calculation: using the adjusted MPG and current fuel prices, HMRC calculates the advisory fuel rates.
    

By doing all this, HMRC ensures that the advisory fuel rates are accurate and reflective of real driving conditions and fuel costs. Here is the calculation breakdown: 

Diesel 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1600	56.7	149.4p	679.0p	12.0p	12p
Between 1601 and 2000	48.0	149.4p	679.0p	14.2p	14p
Over 2000	36.3	149.4p	679.0p	18.7p	19p

 Petrol 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	49.5	140.6p	639.0p	12.9p	13p
Between 1401 and 2000	42.1	140.6p	639.0p	15.2p	15p
Over 2000	26.7	140.6p	639.0p	24.0p	24p

 LPG 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	39.6	96.5p	438.7p	11.1p	11p
Between 1401 and 2000	33.7	96.5p	438.7p	13p	13p
Over 2000	21.3	96.5p	438.7p	20.6p	21p

 FAQs

Is it worth taking a company car?

Whether an employee should use a company car hinges on how much they drive and spend on fuel. If they rack up a lot of miles and their fuel costs exceed the car’s fuel benefit, it’s a good deal. However, if their fuel expenses are low, they could actually end up paying more with the benefit. 

Choose Capture Expense and manage your company cars and fuel with ease 

Want to see first-hand how our platform streamlines mileage tracking, calculations, and reimbursements, all while ensuring compliance with HMRC’s advisory fuel rates. Book a personalised demo today. 

We know why you’re here. You want the civil service mileage rates in Ireland for 2024. So, without further ado.  

The civil service mileage rates for 2024

Here are the new civil service rates for mileage allowance in Ireland for 2024, set by Revenue, effective from 1st September 2023.  

The rates vary depending on the type of vehicle, which includes cars, motorcycles, or bicycles. They also depend on the distance bands and the mileage allowance rate in euros per kilometre.  

Civil service motoring and bicycle rates

Cars (rate per kilometre)

Motor travel rates (from 1 September 2022) 

Distance band	Engine capacity up to 1200cc	Engine capacity 1201cc – 1500cc	Engine capacity 1501cc and over
Up to 1,500 km (Band 1)	41.80 cent	43.40 cent	51.82 cent
1,501 – 5,500 km (Band 2)	72.64 cent	79.18 cent	90.63 cent
5,501 – 25,000 km (Band 3)	31.78 cent	31.79 cent	39.22 cent
25,001 km and over (Band 4)	20.56 cent	23.85 cent	25.87 cent

For electric vehicles, mileage claims will follow the rate applicable to engine capacity 1201cc-1500cc. 

Reduced motor travel rates per kilometre 

Engine Capacity up to 1200cc	Engine Capacity 1201cc to 1500cc	Engine Capacity 1501cc and over
21.23 cent	23.80 cent	25.96 cent

Reduced mileage rates apply to work-related journeys that aren’t solely for job performance. Examples include attendance at approved courses or conferences. 

Motorcycles (rate per kilometre) 

Motorcycle rates (from 5 March 2009)  

Distance	Engine capacity up to 150cc	Engine capacity 151cc – 250 cc	Engine capacity 251 cc – 600 cc	Engine capacity 601cc and over
Up to 6,437 km	14.48 cent	20.10 cent	23.72 cent	28.59 cent
6,438 km and over	9.37 cent	13.31 cent	15.29 cent	17.60 cent

Bicycles

Bicycle rates (from 1 February 2007) 

Rate per km

8 cent

 

Staying compliant

Now, onto the nitty gritty.

In this guide, we’ll tackle the intricacies of car mileage allowance in Ireland for 2024. From what constitutes a business journey and how to calculate it, to submitting a compliant mileage claim.

Join us as we equip you with everything you need to know about civil service mileage rates in the Emerald Isle.
 

What is a business journey and how do you calculate it? 

A business journey refers to travel undertaken by an employee for work-related purposes. Specifically, when they travel from one place of work to another place of work as part of their duties.

This encompasses: 

• Travel between different countries, such as between Ireland and other countries. 
• Travel to a location that is not their usual place of work.

It’s worth noting that a business journey does not include commuting from home to the normal place of work and vice versa; this is considered private travel.

 Calculating the distance for business travel 

When calculating the distance for business travel, the relevant distance is the lesser of: 

• The distance between the employee’s home and the temporary place of work. 

• The distance between the employee’s normal place of work and the temporary place of work. 

Let’s take a look at an example: 

Imagine that the distance from your employee’s home to a temporary workplace is 50 km. And that the distance from their normal workplace to the temporary one is 30 km.

The business travel distance will be: 30km (the lower of the two distances). 

What’s not included in the mileage allowance?

Not all trips are eligible for reimbursement under the civil service mileage rates in Ireland.

The most common trips which aren’t included are

• Personal trips that aren’t directly related to your employee’s job. 
• Trips between your employee’s home and their regular workplace. 

How to submit a mileage allowance claim in Ireland

To be reimbursed for business-related vehicle expenses, your employees must complete a claim form provided by the company or Revenue. They must also submit evidence of the journeys made in their personal vehicle.

Your employees should keep the following evidence: 

• Receipts for petrol 
• Receipts for parking tolls 
• Any additional receipts pertaining to vehicle usage 
• Addresses visited during travel 
• Purpose of each journey 
• Recorded kilometres driven to and from business travel destinations

You must maintain accurate records of all your employees’ claims and provide full evidence to ensure compliance and avoid issues with Revenue.

It’s worth noting that if you have already reimbursed an employee’s expenses at civil service mileage rates, no additional tax relief will be applicable to the employee. 

How to keep track of your mileage expenses 

It’s essential for both you and your employees to maintain precise records of all work-related trips.

Failure to do so could result in Revenue requesting that these payments be treated as taxable income.

The required records include:  

• Name 
• Address(es) visited during travel 
• Date(s) of the work trip 
• Purpose of the journey  
• Distance travelled 
• The trip’s originating point, planned destination, and final destination 
• Documentation for reimbursement (e.g., receipts or mileage rate) 

FAQs

What is classed as normal place of work?

The normal place of work is where employees usually carry out their job duties. It’s typically where the employer provides the necessary resources for them to work. This might vary depending on the employee’s role. Generally, the normal place of work is not considered the same as where the employee lives. This is unless there’s an objective requirement for them to work from home because their tasks cannot be done elsewhere. If an employee chooses to work from home or if the tasks performed there are minor or administrative, it’s not considered their normal place of work. 

Are sole traders eligible to claim mileage?

Sole traders are not eligible to claim mileage using the civil service mileage rates. Instead, they can only claim for the actual expenses they incur, such as fuel, motor tax, motor insurance, hotels, and related expenses. To do this, sole traders should keep detailed receipts for the business portion of these costs. This ensures that their claims are accurate and compliant with tax regulations. 

Do the civil service mileage rates apply to emergency travel?

Yes, the civil service mileage rates do apply to emergency travel.

When an employee needs to work outside their normal hours to address emergencies requiring immediate attention, you can repay their travel expenses. This includes mileage, which can be reimbursed using the civil service mileage rates.

This reimbursement is tax-free and can be claimed for up to 60 emergencies per year. However, it does not apply to non-emergencies such as covering for absent staff, handling increased workloads, or attending routine events. 

Do the civil service mileage rates apply to voluntary work? 

Yes, organisations with altruistic and non-commercial functions, such as registered charities or sports bodies, can repay travel expenses to individuals working voluntarily and unpaid.  

These expenses are tax-free as long as they are necessary for the individual to perform their work and do not exceed the actual costs incurred. However, the payments must not exceed the civil service rates.

Never miscalculate mileage claims with Capture Expense

Capture Expense ensures compliance with Ireland’s civil service mileage rates by managing cumulative mileage bands and automatically calculating the correct reimbursement rates based on fuel type, engine size, and distance travelled.  

Our platform seamlessly integrates with Google Maps to accurately calculate your employees’ travel distances. It automatically selects the shorter route from either your employee’s home or their normal place of work. This ensures full compliance with Revenue’s guidelines. 

Allow your people to raise, submit and approve their vehicle expenses at any time, from any location through the Capture Expense app and streamline the way your organisation manages spend. Book your personalised demo now.  

Cash flow is the lifeblood of any organisation, and it can make or break a company.

However, increasing cash flow can be a challenging task, especially if you have limited resources. 

But don’t worry, you’re in safe hands. We’ve outlined the top 8 ways on how to improve cashflow, regardless of the size of your business. 

8 ways to improve cash flow

1. Do a deep dive into your expenditure

First things first, in order to improve cash flow and plan for the future of your company you need to know exactly how much money you’ve got coming into the business vs. how much you’re spending. 

Start by looking at your income:

Make a list of all your income streams from the previous year in order to detect peaks and seasonal trends (i.e. a boost around the holiday season). This will give you a better understanding of your customers’ spending patterns and which areas of your business are thriving.

Then look at your expenses:

Just like for your income, make a list of all the things you are spending money on such as: employee salaries; office rent; travel and accommodation for the sales team.

Now, for some of these expenses, like employee wages, there’s no wiggle room. But having a clearer picture of all your expenses will help determine where you can cut costs or look for more competitive deals.
 

Finally, compare the two: 

If you find that there are periods during the year when your expenses exceed your income, you can start to question why this is happening. 

2. Increase your prices

It might sound like something you should discuss with your senior management team first (and it definitely is). But even a slight increase to your prices, combined with a small reduction to your costs can go a long way. 
 
Ask yourself: would your clients care? Well, yes, they probably would care if they were told they had to pay more money. But would they care if prices suddenly went up by one or two percent? Probably not.

3. Send out your invoices ASAP

It’s a no brainer really, sending invoices out immediately helps expedite the payment process by encouraging clients to settle their debts promptly.

Make sure your invoices include:

• Clear terms and conditions. 
• The due date in bold at the top and on the payment slip. 
• Instructions for accepted payment methods. 

By immediately sending out accurate, and easy to read invoices, you reduce the risk of late payments and improve cash flow for your business. 

4. Entice your clients to pay sooner

Everyone loves an incentive, and this one’s a win/win for both you and your clients: Offer discounts for early payment. 

Incentivising customers to pay sooner serves multiple benefits. It helps speed up cash flow, providing timely access to funds for both operations and growth. Additionally, it contributes to strengthening your business’s financial position. 

5. Concentrate on building customer loyalty

By focusing on building customer loyalty you can increase retention rates.  
 
You can also ensure more repeat business, maintain a steady cash flow, and turn loyal customers into brand advocates who attract new business. 

6. Invest in your company 

Investing in your own business is crucial for boosting skills, productivity, and overall promotion, which directly impacts cash flow.  
 
While there is an initial cost involved, such investments lead to streamlined operations and improved efficiency. Whether it’s upgrading skills, optimising workflows, or enhancing marketing strategies, the aim is to reduce costs and increase profits.  

7. Improve your inventory

You can increase cash flow by improving your inventory through regular checks to identify “slow-moving items”. 
 
By selling these items at a discount – or discontinuing them entirely – you free up cash tied in inventory and prevent it from jeopardising your cash flow. 

8. Get rid of wasted expenses

Start by asking your employees for input and conduct audits to identify unnecessary costs.  
 
By identifying and cutting out these expenses, you’ll save money that can be redirected towards more productive areas of your business. This will ultimately improve cash flow.

Find more ways to improve cash flow with Capture Expense

We can help reduce your spend up to 44% by saving on costs; improving your spending habits and reducing your risk of expense fraud. 
 
Book a personalised demo today to see Capture Expense in action. 

FAQs

Why is it important to improve cash flow?

By improving your cash flow, you can ensure that your business is here to stay.

You’ll be able to: 

• Invest in new business ventures. 
• Hire more employees.  
• Plan for the future. 
• Meet payroll. 
• And more.

Are there different types of cash flow?

Yes, there are the three primary classifications of cash flow: 

• Cash flow from operations (CFO) 
• Cash flow from investing (CFI) 
• Cash flow from financing (CFF)

These will all appear on the cash flow statement on your company’s financial statements. 

Management accounts offer a window into your business’s financial status, aiding senior management in decision-making and implementation.

This practice holds significant value for all organisations—so regardless of your business size or industry, it facilitates comprehensive insights into past, present, and future financial standing across your entire business.

This article will provide you with an overview of how to prepare management accounts. 

First things first, exactly what are management accounts?

Management accounts, typically generated monthly or quarterly, provide a detailed overview of your company’s financial health. They include key components such as: 

• A balance sheet. 
• A cash flow statement. 
• A brief report. 
• A profit and loss account.

With accurate management reports, you can spot current business trends, address issues regularly, and track your business’s evolution.  

Although they are not a legal necessity and don’t need to be filed with HMRC, they will provide you with greater financial management than ever before and help your company expand.  

Why are management accounts important?

For any business aiming to grow and succeed, management accounts are essential.  
 
By keeping track of your income and spending regularly, you’ll gain valuable insights into your financial health and potential for growth.  
 
Continuous monitoring allows you to make informed decisions and adjust your strategies whenever necessary.  
 
Management accounts go beyond just looking at your bank balance – they take into account factors like upcoming expenses, revenue streams, and market conditions, giving you a full picture of your company’s finances.  
 
Quickly spotting sales trends helps you plan better and seize expansion opportunities, while understanding your profitability margins and trends enables you to make strategic decisions aimed at boosting your net profit.  
 
In short, management accounts provide you with the tools and information you need to thrive and succeed in today’s competitive business world.

How to prepare management accounts

Management accounts are most useful when they contain pertinent facts tailored to your business and are presented in an accessible format for colleagues throughout the company.

Here’s your step-by-step instructions on how to prepare management accounts: 

1. Gather data 

The cornerstone of management accounting rests on the quality and depth of your collected data. Without precise and pertinent data, any subsequent analysis and insights will be distorted.

You should consider:

Source identification: Determine your primary data sources, which may include accounting software, CRM systems, sales platforms, or manual records. Knowing where to extract data ensures crucial information isn’t overlooked.

Time period selection: Decide on the timeframe for which you’re preparing the management accounts. Whether it’s monthly, quarterly or annually, this will dictate the range of data you need to collect.

Data segregation: Categorise your data into sections. For financial data, this could mean segregating revenue, expenses, assets and liabilities. For operational data, segregate sales, production, inventory and customer feedback.

Automation tools: Explore tools and software for automating data gathering, saving time and reducing human error. Integrating different systems ensures seamless data flow and accuracy.

Data validation: Validate the gathered data for any anomalies, such as high expenses in a month or sudden sales spikes, to identify errors that need correction. 

2. Ensure accuracy

Ensuring data accuracy is essential. Inaccurate data can result in misguided decisions, potentially harming your business.

To ensure data accuracy you should employ: 

Cross-verification: Always verify the data collected by comparing it with external sources. For example, ensure that the bank balance in your accounting system matches actual bank statements. 

Reconciliation: Regularly reconcile accounts to identify and resolve any discrepancies. This includes verifying balances with HMRC, suppliers, and other stakeholders.

Audit trails: Maintain clear audit trails to ensure accuracy and trace any discrepancies back to their source. 

3. Produce financial statements

Financial statements form the foundation of management accounts, offering a comprehensive view of your company’s financial well-being.

You should draft a: 

Profit and loss report: This statement provides a comprehensive overview of the company’s revenue, expenses, and overall profitability within a defined period. Accurate categorisation of income and expenses is essential for understanding profit margins and operational efficiency.

Balance sheet: This document presents a snapshot of the company’s assets, liabilities, and equity at a specific moment in time. Regular updates and reviews of assets (such as inventory) and liabilities (like loans) are crucial to reflect the current state of the business accurately.

Cash flow statement: This statement offers insights into the company’s liquidity by illustrating cash inflows and outflows. It is essential for assessing the company’s ability to cover short-term liabilities and operational expenses.

4. Incorporate operational metrics

Operational metrics offer a detailed perspective on your business’s performance, enhancing the financial data.

You should consider:

Sales and production figures: Monitor monthly, quarterly, and yearly sales alongside production costs to assess efficiency and profitability.

Inventory levels: Track inventory levels to maintain optimal stock levels, minimising storage costs and ensuring timely deliveries.

Customer satisfaction metrics: Utilise tools such as Net Promoter Score (NPS) or customer satisfaction surveys to evaluate customer sentiments regarding your products or services, identifying areas for enhancement. 

5. Prepare an executive summary

An executive summary at the beginning of your management accounts can be very helpful. This section could highlight:

• Key monthly data/figures. 
• Notable changes or concerns. 
• Net profit margins. 
• Turnover ratios. 
• A departmental overview. 

6. Analyse and interpret

When analysed and interpreted accurately, data becomes actionable insights.

Consider the following:

Trend analysis: Identify patterns in sales, expenses, and other key metrics. Recognising these trends early can help in capitalising on opportunities or mitigating risks.

Budget vs. actual: Compare forecasted budgets with actual figures to pinpoint overspending or areas of savings.

SWOT analysis: Conduct regular SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses to inform strategic decisions and identify growth opportunities or potential challenges. 

7. Share the insights

Communication is key. Sharing insights ensures that all your stakeholders are on the same page.

You should consider:

Regular updates: Conduct frequent meetings with key stakeholders to review findings from management accounts, promoting alignment and informed decision-making.

Visual representation: Utilise charts, graphs, and other visual aids to present data, enhancing comprehension of complex information.

Recommendations: Don’t just present the data. Offer recommendations based on the insights. This proactive approach can guide the business towards better decision-making. 

FAQs

How often are management accounts prepared?

While there’s no fixed schedule for preparing management accounts, the common practice is to do so monthly or quarterly, allowing business owners to maintain regular oversight of their finances. 

Can management accounts help secure new funding?

Yes, management accounts are crucial for securing new funding. They give investors and lenders a clear view of the company’s financial health and potential for growth, building confidence in potential funders.

How are management accounts different from statutory accounts?

Statutory accounts are primarily used for external reporting and regulatory compliance, while management accounts are internally focused, providing guidance for strategy, assessing financial position, and monitoring progress.

Make better financial decisions with Capture Expense

Effortlessly track and report on all spend with our business expense tracker—giving you an instant detailed breakdown of spending by mileage, user, total expenditure, and more. Book a personalised demo today.

 

Organisations in the UK can reclaim VAT on the fuel component of mileage expenses paid to individuals.  
 
However, navigating this process is complex and requires gathering specific evidence to meet HMRC requirements.  
 
In our blog, we’ve compiled all the necessary information on reclaiming VAT for fuel and petrol expenses during business trips, helping you choose the best approach for your organisation. 

Who is eligible to reclaim VAT on fuel? 

To reclaim VAT on business expenses, including fuel, you need to be a VAT-registered business.  
 
If your annual turnover is below £85,000, you can opt to register for VAT and claim back VAT on expenses. However, if your annual VAT taxable turnover exceeds £85,000, VAT registration is mandatory.  
 
It’s also worth noting that if you’re under the VAT Flat Rate Scheme, you can’t reclaim fuel expenses. 

How much VAT on fuel can you reclaim?

According to HMRC guidelines, you can reclaim 100% of the VAT on fuel used for business purposes.  
 
To comply with HMRC requirements, you must maintain precise mileage records and retain fuel receipts as evidence of expenses. 

How do you reclaim VAT on fuel usage? 

To reclaim VAT on fuel usage, ensure it’s used solely for business purposes (VAT can only be reclaimed on business-related expenses). 

However, as many small businesses and self-employed individuals use their vehicles for both business and personal purposes, this can complicate the process of reclaiming VAT on fuel.

There are two ways you can reclaim VAT on fuel:

1. Reclaim all the VAT paid on fuel purchases and pay the appropriate fuel scale charge for your vehicle. 
2. Claim VAT only for the fuel used during business trips by maintaining thorough mileage records to demonstrate usage exclusively for business purposes. 

How can you reclaim VAT with a fuel scale charge?

If you use a business car for personal purposes, you can reclaim VAT on all fuel usage, including both business and personal use. Then, you’ll pay a fuel scale charge to offset the personal use, eliminating the need for detailed mileage records.

Here’s how it works:

1. Reclaim VAT on all fuel used for your vehicle. 
2. Use HMRC’s VAT fuel scale tool to calculate your fuel scale charge. 
3. Include the fuel scale charge on your VAT return.

However, if your fuel usage is very low, the fuel scale charge might exceed the VAT you reclaim, making this method unsuitable for some businesses. 

Let’s take a look at an example

Imagine you make quarterly VAT submissions and your company uses a BMW 318i with a CO2 emissions figure of 146.

The road fuel surcharge for this emissions figure is £349 per quarter, consisting of a basic charge of £290.83 and VAT of £58.17.

You can deduct the basic charge (£290.83) from the total fuel costs for its Corporation Tax calculation.

For VAT purposes, your company can reclaim the VAT paid on fuel purchases, excluding the VAT portion of the road fuel surcharge (£58.17). 

How can you reclaim fuel VAT by calculating business mileage?

As you now know, you can make a claim for only the fuel you use for company purposes.

For vehicles such as pool cars, commercial vehicles, and petrol machinery, keeping an accurate mileage record is simpler, as all mileage will have been completed for business purposes.

If you use a vehicle for both business and personal use, you will need to keep a detailed record of the purpose and mileage of all your journeys. Once you have calculated the percentage of your mileage that was for business use, you can claim that percentage of VAT back from HMRC. 

How do you prove business mileage to HMRC?

HMRC requires that you keep an accurate mileage log. For this to be compliant with HMRC standards, you must include:

• Date of the journey 
• Purpose (personal or business) 
• Start and end addresses (with postcodes) 
• Total miles driven

You should request monthly mileage logs from all your employees.

It’s also worth noting that any self-employed individuals need to maintain their own records. 

How do you submit a VAT claim to HMRC? 

As a business, you can claim back VAT on fuel expenses, along with other business costs, in your VAT return. If you’re VAT-registered, you’ll need to submit a VAT return every three months, called an ‘accounting period.’  
 
HMRC requires a return to be sent at the end of each accounting period, even if you have no VAT to pay or reclaim. 

The question you’ve been waiting for: Is it worth it?

As you may have guessed, many businesses avoid reclaiming VAT on fuel and petrol due to the complexity of bookkeeping. However, it can be beneficial if you provide free fuel to employees for business purposes.  
 
If this is something you’re interested in, keep records for up to four years, as VAT on fuel can only be reclaimed within this timeframe, and remember to use Fuel Scale Charge and Flat Rate Claim to simplify VAT calculations for fuel expenses. 

FAQs 

What is a reasonable rate for fuel expenses? 

To determine a reasonable rate for fuel expenses, businesses can use HMRC’s Advisory Fuel Rates, which provide standard mileage rates based on engine size and fuel type. These rates apply to both VAT on business fuel usage and private journeys using company fuel.

For employees using company cars and fuel:

• The company can reimburse the employee at the advisory rate for business mileage and reclaim VAT on the payment. 
• Alternatively, the company can cover the fuel cost, then charge the employee for private mileage, reclaiming VAT on the fuel cost minus the employee’s contribution. 

Can sole traders claim petrol costs? 

As a sole trader, you can claim petrol costs as part of your business expenses. You’re eligible for a mileage allowance of 45 pence per mile for the first 10,000 miles when using a car for business purposes. After exceeding 10,000 miles, the allowance reduces to 25 pence per mile. If you use a motorbike for business, the mileage allowance is 24 pence per mile.

Take advantage of our business mileage tracker

If you need help calculating your fuel expenses, or with any other aspect of your travel expenses, book a demo today to see how we can help. 

Did you know that your employees can claim back hours spent on the road? 

Providing mileage allowance for employees who drive for work has become more popular in recent years. However, with HMRC’s many rules and updates, understanding how this process operates can be confusing for both you and your employees. 

This blog aims to offer a complete guide on everything you need to know regarding HMRC mileage reimbursement rates in 2024.

What is HMRC’s mileage allowance?

Car allowance mileage rates allow employees to claim back vehicle expenses for business purposes, covering costs like petrol, road tax, and insurance. Instead of individually calculating wear and tear on each vehicle, HMRC uses standard pence per mile expenses called ‘Mileage Allowance Payments’ (MAPs).  
 
This deduction applies to any employee using their vehicle for business. The purpose is to align with tax regulations, ensuring business costs are tax-deductible and not subject to tax when incurred from a personal account. 

How much is the HMRC 2024 mileage allowance?

With the HMRC set mileage allowance, the same rate is applied for every employee, depending on the type of vehicle they use.  

Type of vehicle	10,000 miles	10,000 + miles
Cars and vans	45p	25p
Motorcycles	24p	24p
Bikes	20p	20p

 

Calculating business mileage is straightforward. All you need to do is multiply the miles travelled by the mileage rate for your vehicle.

For instance, if an employee travels 18,000 business miles in their car, the mileage deduction for the year would be £6,500 (10,000 miles x 45p + 8,000 miles x 25p)

It’s also worth noting that if they travel with colleagues from the same company, the driver can claim an extra 5p per mile per passenger.  

 

Let’s take a closer look at each milage allowance  

 

HMRC mileage reimbursement rates for cars and van

The HMRC-approved mileage rate for cars and vans is £0.45 per mile for the first 10,000 miles per year. After that, it’s £0.25 per mile

For example, if your employee drove 19,000 miles for work this year, they’d receive:

• £4,500 for the first 10,000 miles (10,000 x £0.45) 
• £2,250 for the next 9,000 miles (9,000 x £0.25

For a total reimbursement of £6,750

Hybrid cars follow the same standard rates, while electric cars have a fixed rate of £0.05 per mile, with no limit on mileage. 

 

HMRC mileage reimbursement rates for motorcycles

If your employee owns a motorcycle, they’re eligible to receive £0.24 per mile when driving for business purposes.

Unlike cars and vans, motorcycles are not subjected to the 10,000 miles limit, which means that going above this threshold does not change the 24p rate.

For example, if your employee drove 5000 miles for work this year on their motorbike, they’d receive

£0.24 x 5000 = £1,200 in tax-free reimbursement.  

HMRC mileage reimbursement rates for bicycles

Those who own bicycles might not be paying for fuel, but still incur costs such as insurance, as well as general wear and tear during use. The government recognises this and awards £0.20 per mile for an unlimited amount of business-related mileage.

For example, if your employee cycled 450 miles for eligible business trips this year, they’d receive

£0.20 x 450 = £90 to in tax-free reimbursement. 

What journeys can employees claim mileage on?

Whether your employees drive to work frequently or occasionally, it is worth keeping track of their mileage and understanding what trips qualify to be exempt from taxes, and which do not.

Business journeys employees can claim:

• Travelling from one office to another. 
• Travelling to a temporary location to conduct business (i.e., meeting a client or attending an event).

Business journeys employees can’t claim:

• The daily commute to a permanent office. 
• Travelling to a location very close by. 

• Any travel undertaken for private purposes, even if work-related activities such as making calls or running errands are included.

The only tax-free method for reimbursing business miles is through the approved mileage allowance. Giving an employee a company car or a fixed sum towards petrol will both be taxed, so be aware here.   
 
Other travel expenses like parking charges and road tolls while using a company vehicle are covered under subsistence expenditure, not the mileage allowance. 

 

What are HMRC advisory fuel rates? 

HMRC advisory fuel rates apply to company-owned cars and serve two main purposes:

1. Reimbursing employees for business travel expenses incurred in a company car. 
2. Managing reimbursements when employees use the company car for personal travel and need to repay the business. 

Company car fuel rates are reviewed every three months and can change based on actual fuel rates. You can only rely on the previous rates for up to one month before switching to the current rates.

HMRC fuel rates are influenced by factors like engine size, manufacturer data on miles per gallon, current fuel prices, and the calculated rate per mile

If your employee is using a hybrid car, it’s treated like a petrol or diesel car. But if they’ve got a fully electric vehicle, they are reimbursed at £0.09 per mile. 

The following tables were taken from HMRC and have been in place since 1st December 2023. They’re provided with the purpose of breaking down exactly why fuel rates are at their current numbers: 

 Petrol 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	49.5	152.4 pence	692.8 pence	14.0 pence	14 pence
1401 to 2000	42.1	152.4 pence	692.8 pence	16.5 pence	16 pence
Over 2000	26.7	152.4 pence	692.8 pence	26.0 pence	26 pence

 

Diesel  

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1600	56.7	160.4 pence	729.1 pence	12.9 pence	13 pence
1601 to 2000	48.0	160.4 pence	729.1 pence	15.2 pence	15 pence
Over 2000	36.3	160.4 pence	729.1 pence	20.1 pence	20 pence

 

LPG (Liquefied Petroleum Gas) 

Engine size (cc)	Mean MPG	Fuel price (per litre)	Fuel price (per gallon)	Rate per mile	Advisory fuel rate
Up to 1400	39.6	86.7 pence	394.1 pence	10 pence	10 pence
1401 to 2000	33.7	86.7 pence	394.1 pence	11.7 pence	12 pence
Over 2000	21.3	86.7 pence	394.1 pence	18.5 pence	18 pence

In reality, only the size of the vehicle’s engine and its equivalent price per mile matter.

Let’s consider an example where your business owns a company car.

The car has a 1000cc petrol engine, an employee pays for fuel for 3000 business miles per year. Additionally, the same employee uses the company car for personal use for 800 miles per year.

Using HMRC’s advisory fuel rates for petrol cars with engines up to 1400cc at £0.14 per mile:

• £0.14 x 3000 miles = £420 for business use. 
• £0.14 x 800 miles = £112 for personal use.
   

Therefore, your business can claim £420 from HMRC through the fuel advisory for 2024, and you can also recoup £112 from the employee for personal use. 

 

FAQs 

 

What vehicles are eligible for mileage allowance? 

Employees are eligible to receive mileage allowance payments for any vehicle they own and have registered with the DVLA, such as cars, vans, motorcycles, scooters, and bicycles, provided these vehicles are used for work purposes. 

When do you need to report HMRC mileage reimbursement rates?

If an employee travels over 10,000 miles, you must report it to HMRC using form P11D. Paying employees more than the approved amount of 45p per mile is also considered a benefit and must be reported on a P11D and taxed. 

What’s the best way to reimburse your employees in 2024? 

Tracking and calculating individual mileage allowances for employees, especially for SMEs with company cars, can be tedious. However, expense management software like Capture Expense, uses accurate reimbursement features to simplify this process by automatically calculating mileage based on journey data and HMRC figures, saving time and effort.

 

Ready to streamline your mileage allowance process?

Book a demo with Capture Expense today and discover how our software simplifies tracking, calculating, and reimbursing mileage while ensuring compliance with HMRC mileage reimbursement rates.