Business versus personal mileage: Are you compliant with HMRC regulations?

15 August 2018
Topics: Risk Management

As an employer offering the use of vehicles to employees, a very important step to ensuring HMRC compliance involves something called ‘benefit-in-kind’ tax.

What is a ‘benefit-in-kind’? 

Private use of a company vehicle is a benefit-in-kind. For example, if an employee drives a company car and uses a grey fleet approach. Here, mileage capture is vital as well as being able to validate locations travelled to as either personal or business.

Benefit-in-kind means two things for employers:

  • Commuting to your permanent place of work is classed as private use. Employees must pay income tax on the value of this benefit, except for instances when the vehicle was used outside of company hours for personal reasons.
  • Fuel is a taxable benefit. When fuel is free to the employee or subsidised by the company must be recorded for HMRC. Any fuel that is used for business mileage, versus private mileage, must be recorded clearly in company records.

What happens if you fail to record this?

HRMC regularly penalises companies that fail to pay the proper tax revenue, meaning it’s imperative to precisely declare any benefits-in-kind. In fact, employers can be fined up to £3,000 per annum per employee for incorrect tax returns. Relying on manual records for HMRC audits can present huge risks.

How can you ensure compliance?

One way to simplify this task is with the help of vehicle tracking. Ensure HRMC compliance by recording detailed information for your business automatically via a GPS tracking device:

  • Types of trip (business or private) – This is the crucial benefit in terms of tax compliance as it will determine if the miles are taxable or not.
  • Mileage information – Quickly determines how much tax will be due.
  • Dates and locations – The system will provide reliable, recorded evidence.

Quartix goes one step further to helping you calculate and report your taxes. By working in harmony with Fleetcheck, we not only provide mileage data from our trackers, but can also integrate fuel card information, to split fuel costs across your fleet and better establish how much tax you owe for business miles.

Keeping your records up to date and accurate is the only way to ensure you are reporting and paying the correct amount to the HRMC. A reliable vehicle tracking system does the hard work for you, meaning you can submit your figures to HMRC with confidence.

For more information you can read about employee car ownership and benefits in kind on the government website.

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