Mileage Rates Question

[KLM]

Just a quick question that I hope someone might be abe to help with.

The company I work for pays a mileage rate of 45p per mile.

It charges to clients a rate of 50p per mile.

It therefore makes 5p for each mile driven by an employee.

Is this allowed? Do the company have to charge mileage to clients at the same amount they pay employees?

TBH I don't really mind that they are making money as it's only a small company and they need help to stay afloat, I just wondered if they were breaking any rules by doing this as it was my understanding that expenses incured should be recharged at cost?

Many thanks

Mark

[ap0gee]

I thought mileage rates were set by law:

40p per mile if it's out of your own pocket (which it has been for ages, incidentally), and the following if you have a company car:

Engine Size
Petrol
Diesel
LPG

1400 cc or less
12p
13p
7p

1401 cc to 2000 cc
15p
13p
9p

Over 2000 cc
21p
17p
13p

(sorry for not tabulating correctly!)

[KLM]

As i understand, that is only to do with tax. Therefore any amount over and above the stated figure is taxable.

[ap0gee]

Originally Posted by KLM

As i understand, that is only to do with tax. Therefore any amount over and above the stated figure is taxable.

Ah-ha!

[Mike C]

Charging a client more than they pay you isn't illegal. We send riggers out to do work for customers and while they get paid 40p per mile, we charge the customer 50p per mile.

[KLM]

Cheers for that.

Just wondered.

[Dr Zoidberg]

Originally Posted by KLM

Just a quick question that I hope someone might be abe to help with.

The company I work for pays a mileage rate of 45p per mile.

It charges to clients a rate of 50p per mile.

It therefore makes 5p for each mile driven by an employee.

Is this allowed? Do the company have to charge mileage to clients at the same amount they pay employees?

TBH I don't really mind that they are making money as it's only a small company and they need help to stay afloat, I just wondered if they were breaking any rules by doing this as it was my understanding that expenses incured should be recharged at cost?

Many thanks

Mark

They can charge and pay whatever they like - these are two entirely separate contracts , and there is no legal requirement for them to pass on everything to the employee , just as they (obviously) don't pay you the same as the daily rate you are charged out at.

[slider]

With our firm, employees using their own car get 46p - the 6p is taxed. This is charged back to clients at 55p.

Those with company cars get a business mileage fuel rate of 13p and pay for all their own private fuel. This rate went up last week from 11p to 13p while the rate for "own car" did not. All those with company cars and benifited are senior management

[Mike C]

However I have heard a rumour that the "own car" business rate is due to be reviewed shortly (I had heard a decision would be made by the end of this month) with a view to increasing from the 40p base rate due to spiralling fuel costs.

[Conshine]

Originally Posted by Mike C

However I have heard a rumour that the "own car" business rate is due to be reviewed shortly (I had heard a decision would be made by the end of this month) with a view to increasing from the 40p base rate due to spiralling fuel costs.

It wouldn't hurt for it to go up a bit, I have seen my fuel bill rocket for the miles I do for my business.

[loskie]

HMRC set the rate at 40ppm for the first 10000m then it drops to 25ppm. This rate was set in 2002 when diesel was 72 pence/litre. It's now at 132.9 here. How HMRC justify co car drivers having an increase from 9p to 13p for fuel but own car drivers having no increase infuriates me. At the end of the day you end up subsidising your employer.

[devonutopia]

The 50p/45p thing is just a profit margin thing.

The 5p over 40p you're being paid, should be being taxed by your employer, or if not, being declared as extra taxable income on a tax return.

[heresmo]

Originally Posted by devonutopia

The 50p/45p thing is just a profit margin thing.

It wouldn't really be all profit given that expenses carry a high admin cost when all processing aspects are taken into account. £0.05 isn't a massive amount IMO.

I'd add that companies will (or should) have set out their terms of business, incl mileage or travel charges and a daily rate if an overnight stay would be involved. A potential customer has the choice of accepting them or doing business elsewhere.

Incurred direct costs were always a nightmare to recharge as a customer would often sign off on a bill for £trillions for the work but would always try to get 50p back for an unnecessary cup of coffee paid on expenses which took up so much management time to resolve that fixed-price became the better way to go. By the converse, some companies would undercut a competitor with their tender price to get the business and then say to themselves, "Don't worry, we can always screw 'em on expenses." Most business people understand what goes on, though consumers who agree things over the phone with nothing in writing and aren't business savvy can easily come a cropper.

Mo