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VAT on Mileage and Fuel Rates

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Capture Expense stores company/private vehicles tax and fuel rates which allows the software to automatically calculate and store the correct mileage claims for staff as well as provide information for P11D forms.

Approved Business Mileage Rates

If you make expense payments to employees above a certain amount, you’ll have to report them to HM Revenue and Customs (HMRC) and deduct and pay tax. Mileage Allowance Payments (MAPs) are what you pay your employee for using their own vehicle for business journeys.

You’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC, this is called an ‘approved amount’.

Expense Once stores the approved rates and you can generate a reports which shows how much you’ve paid to staff versus the approved amount, which is determined by simply multiplying the employee’s travel miles for the year by the rate per mile for the vehicle. The total includes any type of vehicle they’ve used. The rates below were correct in 2020.

Type of vehicle   10k miles   >10k miles
Cars and vans         45p               25p   Motorcycles            24p               24p   Bikes                       20p                20p  As an example: Your employee travels 12,000 business miles in their car – the approved amount for the year would be £5,000 (10,000 x 45p plus 2,000 x 25p).

You can generate a report from Expense Once which will show the amounts paid, if they’ve been paid anything above the approved amount, HMRC can be notified using form P11D.

Anything below the ‘approved amount’ then you won’t have to report to HMRC or pay tax, but your employee will be able to get tax relief (called Mileage Allowance Relief, or MAR) on the unused balance of the approved amount. You can make separate optional reports to HMRC of any such unused balances under a scheme called the Mileage Allowance Relief Optional Reporting Scheme (MARORS). Contact HMRC for more information here:
 Advisory fuel rates
  Advisory fuel rates are the recommended repayment amounts when you are reclaiming the fuel element on business mileage. Including:
 – The amount of VAT to reclaim on business mileage in a personal vehicle- How much employers can reimburse employees for business travel in their company cars

The latest advisory fuel rates can be found here: VAT and Mileage
  The advisory fuel rates are inclusive of VAT, so for example:
 VAT at 20% and advisory fuel rate being 21p per mile for a distance of 100 miles. The gross amount would be £21.00, which would equal 120% of the fuel cost, so the VAT element is calculated by dividing the amount by 6, thus VAT mileage amount would be £3.50. Expense mileage reclaim in a personal car:   45p x 100    =  £45.00
 (21p x 100) / 6  =  £3.50  Net     £41.50    Tax     £  3.50     Gross £45.00
 Expense mileage reclaim in a company car:
   21p x 100          =  £21.00
 (21p x 100) / 6  =  £3.50

 Net     £17.50     Tax     £  3.50    Gross  £21.00

Software provider on the G-Cloud Digital Marketplace

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G-Cloud or The Digital Marketplace, and all the frameworks included in it, is managed by Crown Commercial Service (CCS). CCS is an executive agency and trading fund of the Cabinet Office of the UK Government. Their role is to improve the government’s commercial and procurement activity.

The framework was first open in 2012 and is now in its 11th iteration – G-Cloud 11. With the 12th iteration due to open in March 2020.

Capture Expense our proud to have become a software provider through the G-Cloud Digital Marketplace, for the last 3 years and we’re already planning for the 12th iteration. Our company have been reviewed and vetted to ensure we can deliver large scale enterprise solutions using best practice, technologies and processes, giving public sector buyers assurances that we deliver to their requirements whilst meeting the highest possible standards.

How Technology Helps Your Company Manage T&E Costs

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A recent survey carried out by Forrester Research showed that most of the 348 financial decision-makers, indicated that T&E is among the most difficult of expense categories to control. It’s among the three most challenging operating expenses, second only to maintenance and repairs. Some of these organizations have implemented a travel and expense management system to help take control costs and reduce the burden on processing the claims.

Of those with expense management systems, it was found that 80 percent indicated the software wasn’t automated and required employees to enter expenses manually. Feedback was that “This is time-consuming and increasingly leads to employee dissatisfaction” as well as “Introducing many opportunities for data error.”

Whilst analysing the T&E report, it showed that 59 percent of firms continue to rely on spreadsheets whilst 42 percent can not even import data from other in-house systems. This indicates that companies can’t fully understand their external spending or identify opportunities to reduce and control spend.

Thankfully there are solutions on the market today which provide solutions that deal with these issues, the most cost-effective of them Expense Once

This a cloud based expense management solution, that provides an intuitive web and mobile interface for submitting and approving claims. They offer a single integrated solution, along with a comprehensive set of controls for automating Travel and Expense management, reducing administration and enforcing business policy, saving your business a lot of administrative time and money.

The research showed that delivers up to 78% cost savings and is one of the most efficient cloud-based expense management solutions on the market. It was built in partnership with Microsoft, developed using best practices to ensure unmatched level of security, speed of use, whilst utilizing Azure, which is used by over 90% of blue-chip companies.

In summary they’ve developed an unparalleled product along with free services such as real-time Receipt scanning using OCR, daily currency rates, automatic distance calculation miles/Km, along with configurable approval processes, comprehensive compliance and policy controls along with much more. Expense Once can support even the most complex of requirements, allowing the software to be used with any size of business whilst maintaining ease-of-use and maintaining the highest level of security controls. Contact Expense Once today to see how they can help reduce your costs and improve your business systems.