A ten mile distinction on business claims

The latest update to HM Revenue & Customs (HMRC) advisory fuel rates sees 1p reductions to several petrol and LPG rates.

These rates can be used where an employee is reimbursed for business mileage driven in their company car, and will be reviewed again on 1 March 2016. When employees use their own car for business mileage, then a rate of 45p a mile can be paid for the first 10,000 business miles driven each tax year, with 25p a mile thereafter. The big question, of course, is which journeys count as business mileage? The current rules are complex.

If a journey is essentially the same as the employee’s normal commute, then it does not count as business mileage. HMRC normally applies a ten mile rule, and it is increasingly reinforcing this when checking on mileage claims. For example, an employee’s normal commute to her employer’s office is 20 miles. One day, she drives past the office to meet a client situated a further 12 miles away. Although the total of 32 miles includes the normal commute, the entire journey qualifies as business mileage. The ten mile rule is, however, not relevant where an employee needs to travel in a completely different direction to their normal commute.

We are here to help if you need advice.