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  • Business mileage expenses and what to charge clients
  • PaulGillespie
    Free Member

    An interesting topic came up for discussion today in the office and we’re unable to come to a conclusion, anyone got an opinion or can say how it is done in their place of work?

    The scenario; I work in the service industry where we are sometimes required to visit clients, regularly we will go straight to a clients site straight from home in the morning as this saves time over all on travelling.

    So, what do we charge the client?

    The return mileage from our office – regardless of where the staff member starts their journey from.

    The mileage from my home to the clients and then back to my office.

    The mileage difference between my commute to work and my travel to the clients and then the distance back to my office.

    It seems that we’ve all been doing it slightly diffrently here!

    uplink
    Free Member

    We charge it by the hour rather than mile – min 1 hour

    wwaswas
    Full Member

    inland revenue will only let companies pay mileage from someone’s normal place of work to the client site.

    I would expect to pay the same ‘mileage’ regardless of who was visiting from a supplier, so on that basis from their main office would be normal.

    PaulGillespie
    Free Member

    wwaswas, thanks. That’s the way I think it should be, nice and consistant…but…say the trip is 100 miles round trip from my office to the clients. I charge them for 100 miles. What if I live 10 miles from the client and my total mileage from home to client back to office is 60 miles, what do I put down on my personal expenses that I claim? what about the other way? Say I live 60 miles from the clients and my total mileage is 110 for the day?

    Thanks

    wwaswas
    Full Member

    as above, really – if you claim anything other than mileage from the office to the client site the revenue will treat it as a ‘benefit’ and it becomes taxable.

    it’s really up to your company to have a policy – previous one I worked for always paid ‘from office’, regardless.

    My current company we are all homeworkers so it’s a bit mroe complex…

    Scamper
    Free Member

    I’d just charge them what ever mileage you do, regardless as to where its from. If its a company car, the current HMRC fuel only allowance you can personally claim back without BIK implications is currently circa 11p per mile based on a 2.0 tdi. Would this be transparent enough?

    Out of interest, we have to keep mileage charts form benefit in kind tax reasons. As consultants are based at home, they can claim their fuel on mileage from there.

    PaulGillespie
    Free Member

    OK, great a view from the “other side”! 🙂

    No company cars, we use our own and claim mileage at 40p per mile. Annual business mileage is around 2000. We don’t have a policy as we’ve always used common sense. Things are more complex now and common sense varies between people. I’m looking to put a policy in place.

    So, I charge the client 100 miles but I actually travel 60 and claim for 100 on my expenses. The staff member (me) benefits, the company and the client lose out. seems a bit off.

    If I charge for the actual mileage driven then the invoice will vary depending on who visits. Client does not have consistant invoices, asks for certain staff based on their location and queries invoices contantly. Not good!

    Cheers

    Spongebob
    Free Member

    Add up the cost of insurance, loans, fuel, depreciation, servicing, incidental costs and divide the total by your annual mileage. Apportion an amount after working out the ratio of business to private mileage.

    You’ll then have your cost per mile, total cost for business and total cost for private.

    Then factor in tax allowances, any tax liabilities (such as fuel cards and mileage allowances).

    You’ll then have an idea whether it’s worth destroying your own car for the benefit of your employer.

    The other consideration is whether you want to be at the wheel so much. Consider the implications of the increased risk of accidents, fines and the damaging effect too much motoring has on your wellbeing.

    Personally, i’d only drive for an employer if they provided a car entirely at their expense. A vehicle to be kept at my place of work – a pool car!

    Zulu-Eleven
    Free Member

    what do we charge the client

    the correct answer is, of course, the highest of the three possible figures on a case by case basis 😉

    PaulGillespie
    Free Member

    Thanks Spongebob, the mileage is minimal really, I do about 1500 miles per year and the most that one of us does is 3000 miles in a year. we are all happy to use our own personal cars and we have just bought a pool vehicle which will take most of the burden. the issue here is about what mileage we can charge our clients as a company, and what the staff can claim on their expenses. I want the system to be fair for all. is this possible?

    nickf
    Free Member

    Cost per mile is one thing – use AA approved 40p/mile or whatever and no-one can complain.

    The number of miles is simple – the shorter of office-client or home-client. Use Multimap or whatever to give the mileage, not what the mileometer says.

    PaulGillespie
    Free Member

    Zulu, that would be nice! but this would add an admin overhead (I don’t like admin!)

    PaulGillespie
    Free Member

    Thanks Nick. That’s one of the ways we’re thinking about doing it. It does mean that the costs to the client are variable however. But then you can’t have everything.

    steveh
    Full Member

    What you can charge and what you can claim are very different things. Your claim should be only the mileage actually done less your mileage to and from your normal place of work. HMRC set amounts that you can claim, your employer can pay you more than these but the amount paid over the HMRC rate is then taxable.
    You can charge clients whatever you like at whatever rate you like. There is no need to stick to HMRC rates or rules for the charges. The rate will depend on if you charge for travel time as well on top, build it in to the rate or ignore it.

    PaulGillespie
    Free Member

    Ok, thanks for all the responses. Seems like we just have to decide which way we want to do it.

    Cheers!

    TandemJeremy
    Free Member

    I would charge the clients from the office to them. the workers claim total mileage minus their usual commute

    PaulGillespie
    Free Member

    TJ, that’s the system we’ve just settled on here after debating it for the last 3 hours or so!

    It’s been made all the more intersting as we have staff that live a fair distance away and can make the figures\charges not look so straight forward. I.e. we have some staff who live right next door to clients, the distance to their site is tiny but the mileage charge is from the office. Hey ho 🙂 winners and losers in everything.

    mefty
    Free Member

    If the employee is reimbursed more than “incurred” (i.e. because mileage is less from home than from office) then this is taxable as a benefit, because you are being reimbursed more than cost to you. Likewise if you say you charge out-of-pocket expenses how can you charge more than the actual costs i.e the amount you are out-of-pocket.

    andy7t2
    Free Member

    the answer is
    charge the client from office to clients every time

    employee claims only for the miles he has done minus commute miles

    use the extra money claimed to buy the client a xmas present

    this way the client get the same charge every time, all employee claim the same regardless of how close they live to the client, the client gets a nice xmas present and your not ripping the client off

    br
    Free Member

    employee claims only for the miles he has done minus commute miles

    Eh? Didn’t you know that ‘trianglulation’ had disappeared years ago?

    The correct answer is that the what you charge the client and what the employee charges you may not be the same.

    I would (and always have) used HMRC guidelines for employee expenses (40ppm for first 10k, 25ppm beyond), then is on the ‘dispensation’. And the mileage they claim is the actual journey they made (from either home, or office), irrelevent of ‘commuter’ mileage.

    The charge to the client is whatever you agreed (and can get away with :wink:) – but be careful of charging a ‘standard’, as the client may then be aggrieved when they know that the employee came a shorter distance – not worth the agro IMO

    And also they may ask for the local guy again…

    EDIT
    inland revenue will only let companies pay mileage from someone’s normal place of work to the client site.

    Garbage, its the actual journey they make.

    hh45
    Free Member

    The number of miles is simple – the shorter of office-client or home-client. Use Multimap or whatever to give the mileage, not what the mileometer says.

    This is what we make our staff do and as people say many people live along way from office but close to the client. Yes, it means invoices can be inconsistent but we can say that we are charging no more than we need to and not subsidising peoples commutes. Personally I hate the idea of people profitting from driving so am a bit of a pedant about the subject.

    PaulGillespie
    Free Member

    Ha ha, yeah it seems that the opinions of us here in the office are represented pretty evenly here too. So there is no right or wrong, just the way we decide to do it.

    I looked on the HMRC site for guidelines but they seem to only focus on issues related to tax (not surprisingly). As far as I can tell, there are no government regulations governing this.

    Thanks for all the input!

    geoffj
    Full Member

    Why charge the client a separate amount anyway? Surely the simplest option is to factor it into the call out charge and not try to be too transparent about it.

    KISS

    PaulGillespie
    Free Member

    Thanks Geoff. Our contracts with our clients are fixed cost, no call our charge (I like KISS too!) so it’s hard to factor this in without exposing ourselves to the risk of not making any money if we should be required to make multiple visits. We could always charge on the higher side but this could lead to us being less competative in the market and potentially losing out on new business. Also, we only charge mileage to our clients if they are over 15 miles away from our office. The ones further away are happy to pay a mileage charge to cover our transport costs. The time we spend travelling to them is not charged so they get a pretty good deal, IMO.

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