Fleet News

Directors hit out at changes to business mileage reimbursements

COMPANY directors have heavily criticised the Government's changes to mileage reimbursements for business journeys. The Institute of Directors, which represents 54,000 directors in the UK, argues that the Government should have done more to simplify tax-free, National Insurance-free Inland Revenue Authorised Mileage rates.

These rates offer drivers three pairs of rates depending on a car's engine size and miles driven. From April 6, 2002 employers will be able reimburse drivers using their own private cars for business trips according to a pair of rates - 40p per mile for the first 10,000 business miles a year, and 25ppm thereafter.The IoD claims the 40ppm rate should have been applied to all motoring in employees' own cars, regardless of their mileage.

Richard Baron, deputy head of policy at the IoD, said: 'The most straightforward solution would require the Government to give up some National Insurance. The need for simplicity would affect the amounts of money collected, rather than the amounts being settled first and the administration having to cope as best it could.'

The Inland Revenue says the new system will be considerably more straightforward for employers to administer than the current regime. Mary Braim, Inland Revenue policy adviser on transport benefits, said: 'We want to align tax and National Insurance treatment while causing as little extra work for employers as possible. We have not yet announced how we will handle the National Insurance contributions - we are consulting at the moment, and hope to get draft regulations out in the next few weeks.'

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