What records must be kept to claim business mileage?

If you drive your own vehicle for business travel, you can claim back the money you spend on petrol or diesel. The amount of money you can claim is set down in HMRC’s Approved Mileage Allowance Payments (AMAPs) and, under legislation enacted in 2011, is 45p per mile for cars and vans, for the first 10,000 miles. Anything over 10,000 miles is paid back at 25p per mile. In order to reclaim these expenses, detailed records must be kept. We take a look at what’s required of both employers and employers.

Employers’ Obligations

Recent tightening by the government of the regulations surrounding business mileage expenses mean that now, more than ever, employers are required to pay meticulous attention to the expenses claimed by their employees. Business Record Checks (BRCs) are expected to be carried out by HMRC on over 60,000 SMEs over the next two years in an effort to claw back up to £120 million in ‘lost’ revenue. Up to 40% of SMEs do not keep an adequate record of business mileage claims, with many drivers claiming more in driving expenses than they are legally entitled to.

If your employees use their own vehicle for travelling during the course of their work (not including commuting to and from work) you, as an employer, are legally required to keep comprehensive records. Failure to do this can result in intensive HMRC audits, which may involve examining more than mileage records, possible having a detrimental effect on your business, plus fines that can reach into 6 figures.

To ensure clarity for both employees and HMRC, it is important that accurate and simple guidelines are in place. These guidelines should lay out what the organisation concerned expects of its employees in terms of what’s acceptable and what’s not in relation to mileage claims.

The minimum relevant information required is:

– The date of travel

– The total mileage covered per individual journey, including a start and end address

– reason for the journey

– Whether the employee incurred any other expenses, such as parking

– What car they are driving

– The mileage rate offered

For The Employee

It is important to note that fraudulent mileage claims are against the law and you can be prosecuted if you are found to have defrauded your employer. It is also your personal responsibility to compile records of travel expenses (as set down within your employer’s guidelines) in a timely and organised manner, both to ensure that you are not out of pocket and to enable them to comply with any HMRC audits to which they may be subject.

On the bright side, however, if you do travel for business, the importance of reimbursing your expenses has been long recognised and your employer should have an efficient and effective expenses claim procedure in place.

If your employer does not reimburse you up to the statutory level of 45p per mile, you may be able to seek tax relief on the outstanding amount, which should mean that you are not left with an income shortfall at the end of each accounting period. If you are in any doubt as to what you can claim, you should seek advice from your employer.

Use our free calculator to find out how much income tax you could be entitled to reclaim.

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