THE Inland Revenue has published a new guide that explains what expenses employees can claim tax free if they use their own vehicle for work.
The information in the 23-page leaflet, entitled 'Using your own vehicle for work', came into effect on April 6.
It addresses when employees can claim tax relief for some or all of their business travel when using their own vehicle, and details the new National Insurance Contribution treatment of motoring expenses.
The leaflet also highlights which journeys qualify as a business travel, which records employees should keep of their allowances and business mileage, and what information an employee should give the Inland Revenue.
From an employer's perspective it outlines the information to supply to staff, and the fixed amounts an employer can pay free of tax and NIC.
'Using your own vehicle for work' is coded IR124 and available free of charge from Inland Revenue Enquiry centres, tax offices or via www.inlandrevenue.gov.uk
Business travel is a journey: 'you have to make in the course of doing your job. For example, if you travel from your office to visit a client and use your own car, van, motorcycle or bicycle.' Or a journey 'to or from a place you have to attend in order to do your job. For example, if you travel directly from home to visit to visit a client (unless the journey is practically the same as your ordinary commuting journey, because the client's premises are just down the road from your office).
Journeys that are not business travel are: ordinary commuting, private travel. Employees who receive an allowance for ordinary commuting or private travel, should have tax and NIC deducted from it.
The Inland Revenue has published a scale for the maximum allowance (without incurring tax or NIC) that an employer can give staff for business mileage when they use their own vehicle. This scale is called the Approved Mileage Allowance Payment (AMAP), and from April 6, 2002 the mileage rates are:
Vehicle - First 10,000 business miles - Each mile over 10,000 miles in the tax
Cars and vans - 40p per mile - 25ppm
Motorcycles - 24ppm - 24ppm
Bicycles - 20ppm - 20ppm
If an employer pays less than the AMAP rate, employees can get tax relief for the difference, called 'Mileage Allowance Relief'. Employees who want to claim MAR have to keep a record of business miles and AMAP payments received. Employees cannot claim tax relief for any costs above the AMAP rates.
Employers can also pay staff an allowance for business passengers of up tp 5 pence per mile without the driver incurring tax or NICs, although the passenger must also be an employee travelling on business.