Like any responsible company, we pay our people a mileage allowance if they use their own vehicle for work travel.
This is based on HMRC’s current allowance of 45p for the first 10,000 miles for business-purposes, and 25p for each business mile thereafter.
For years we have been confident that this rate sufficiently covers the fuel and other vehicle costs.
With the cost of fuel increasing as fast as it is, we have reviewed the allowance and found that, on average, it starts to be insufficient to cover all costs once fuel exceeds £1.90p per litre.
In the past month fuel costs have started to exceed £1.90p per litre, so we are implementing systems for making sure that our people are not ‘out of pocket’ for their vehicle costs (it is never right for a company to be subsidised by its employees).
The difficulty is that if we increase the 45p rate, the employees will be heavily taxed on this as it will be classed by HMRC as a ‘benefit in kind’ and it will also be complex to administrate. So we are looking at other options including payroll.
I am interested to hear how other organisations are addressing this element of the cost of living and business increases and whether industry bodies are supporting us by lobbying government for an increase in the 45p rate.