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Linking subsistence allowances to mileage capture saves £500,000

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Willmott Dixon and 450 of its employees are expected to save £500,000 a year through a new subsistence allowance scheme which is audited using TMC’s mileage capture system.

Graham Dundas, deputy chief financial officer at Willmott Dixon, explained: "We saw the advantage of allowing our staff to receive the £5 or £10 benchmark subsistence allowances through a salary sacrifice arrangement.

"We wanted to obtain HMRC approval for the arrangement and realised that we would need a very robust control mechanism for identifying when people were on qualifying company business.

"Since subsistence claims go hand-in-hand with travel, we quickly realised that the TMC system already provided us with a tightly-controlled, audited process for recording business mileage.

"Aligning subsistence claims with mileage records was the ideal way to police the system and ensure that staff only claimed when they were out on qualifying business."

TMC developed a complete online solution for the scheme. Employees record the times of their journeys such that the system automatically calculates how much time they spend away from their home or permanent office.

The system ensures that claims cannot be made in respect of commute or private trips and calculates which subsistence rates apply.

The system accommodates journeys by train or other forms of transport as well as driven car mileage.

To make the salary sacrifice legally effective, employees in the scheme must accept a change to their terms of employment. TMC handles this aspect for Willmott Dixon by asking participants to record an annual declaration of acceptance via the system.

The TMC system also links directly into the company's payroll system, making claims and payments a seamless process.

"The scheme received HMRC's approval on the grounds that the contractual variation was robust and that we had the necessary controls, checks and internal audit in place to ensure that it is properly managed," said Dundas. "They were impressed that the scheme links subsistence payments to mileage claims in a highly-controlled environment."

As the UK's second largest privately owned construction, regeneration and support service company s, Willmott Dixon has hundreds of employees who qualify for the benchmark subsistence allowances as they travel to sites, properties and projects around the country.

The scheme can save a higher-rate tax payer over £80 a month if they are out on qualifying business every day, according to Dundas.

Paul Jackson, managing director of TMC, said: "Mileage-related initiatives are the new frontier of fleet cost management. There is huge untapped potential for fleet operators to reduce fuel use, CO2 output, tax liabilities, expense payments and running costs by controlling mileage proactively."   

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