Any businesses which utilise company-cars or ‘fleet vehicles’ are required to report usage of these vehicles to the HMRC (HM Revenue and Customs) – failure to do so can result in hefty fines. Records must include information regarding date of travel, number of miles travelled, reason for journey and start point and destination (as well as any locations in between). Additionally, these records must also identify the vehicle and type of fuel used, as these aspects affect the amount being reclaimed by employees.
In addition to HMRC compliance, there are many reasons why business and personal mileage should be thoroughly tracked - whether it be benefitting from tax reductions due to reduced overall mileage as a result of accurate tracking, saving on admin time for drivers by using innovative approaches to mileage tracking, or supporting government aims for reducing C02 emissions.
It’s important to have a robust system in place to track and report both business and personal mileage, especially since HMRC have taken a tougher stance on accurate mileage record keeping. Read our top tips on the most efficient and easy ways for your business and employees to track mileage, so that you don’t get caught out:
1. Take Advantage of a Mileage Log
Although it may seem outdated with the world of technology growing by the minute, a handwritten log of business miles is a great idea to keep on top of mileage tracking. This is an inexpensive method and would work great for smaller companies - however it may be a good idea for the handwritten log to be backed up by an electronic spreadsheet. Creating an electronic version will also make it easier to add up the total mileage, compared to a handwritten log. Again, although reliable, this method could be very time consuming so may work better for a smaller fleet/business.
On the other hand, larger businesses who have bigger fleets and therefore more drivers to manage, may want to consider using an electronic expense system – so, instead of recording they journey details, employees will just be required to upload their mileage into the company’s expense system.
2. Use a Dongle, Telematics Device or Smartphone Apps to Track Journeys
There is technology available that can be used to track the time used for business and private mileage, efficiently separating one from the other, which saves a lot of administration time. Although more expensive then a handwritten logbook or an electronic spreadsheet, these methods are also a lot more accurate and would work better for larger businesses and fleets. There is a lot of choice on the market with regards to mileage software, so it's important to do your research and find which method will suit your business the best. Here are some of the best options available for fleet mileage tracking:
Dongle/ Mileage Logger
The use of a dongle within a fleet vehicle works by the driver simply plugging it in to a USB port, which will then allow the journey to be tracked via GPS. The data can then be uploaded and stored to a computer, saving a lot of admin time for drivers. This is a more accurate way of tracking mileage than the use of a logbook or electronic spreadsheet, however drivers may forget to plug it in from time to time, meaning they will manually have to record journeys/miles that are not tracked using the dongle.
Using a telematics device is an easy way to separate business miles from private miles and also offers high accuracy of every journey travelled - significantly saving on admin time. At the start of a journey, drivers are required to press a button which determines the purpose for their journey and the miles are then logged accordingly. The telematics journey data can then be logged onto a web-based application where the driver can input their reason for each journey - and then a report for driver's expenses will be generated.
This is becoming a popular mileage tracking method for companies. Cheaper than the use of a dongle or telematics, yet still just as accurate and effective by carrying out the same functions, the use of a Smartphone App is a great way for employees to track and record their mileage. The mileage of a journey is tracked via GPS signal, which can then be uploaded and stored on a computer or on to the business' electronic database.
3. Provide Employees with Fuel Cards
Fuel cards are a great way to separate the costs when it comes to business and private mileage, as well as ensure fuel accountability as they allow easy tracking of fuel spend by employees. Fuel cards can be issued with a limit on them which will encourage employees to fill up at supermarket fuel stations, rather than at those on motorways, which tend to be a lot more expensive – providing efficiency for businesses when it comes to fuel cost and expenditure.
Many fuel card companies also offer mileage capture software, offering an additional back up and guarantee of accuracy when it comes to company mileage tracking.
Offering not only an easy method for mileage tracking, fuel cards also provide a simple payment method for employees, with all transactions recorded online – one less thing to worry about when it comes to claiming expenses back.
4. Communicate Guidelines with Employees
Businesses must be aware of common mileage fraud tactics that employees may carry out in order to boost their income for personal gain. Keep an eye on things such as miles being rounded up and the odd mile here and there can really add up – this is likely to be happening if many of the mileage amounts of journeys end in 0’s and 5’s. It is important that you communicate guidelines to employees to ensure that this doesn’t happen – reiterate and make them aware of the seriousness and implications they (and the business) face when claiming false miles. Other things that employees might do, that you should be cautious of are:
- Elaborating the length of journeys or making them up completely
- Claiming private miles as business miles – a 60:40 split of business to private is on average what is expected from HMRC
- Car sharing with another employee, yet both logging and claiming the mileage back
Using technology such as telematic devices, mileage loggers and smartphone apps can help towards ensuring that issues such as these are kept at bay.
5. Review Approach to Mileage Tracking Regularly
Mostly importantly, it is important to review your approach to mileage tracking on a regular basis, this is due a combination of changes in technology, employees and fleet vehicles – not to mention changes in legislation from HMRC.
It is critical that you check that your employees are claiming back the correct monetary amount as different rates apply for different types of vehicles -failure to do so may result in hefty fines and it may be seen that you are claiming back more money than you are entitled to for personal or business gain.
Also, as the culture of your company changes or the amount of company car drivers increase (or decrease), it may be relevant for you to review and reconsider the approach or method you and your drivers are using to track mileage. Paying out for a more expensive, yet more accurate tracking method may save your business more money in the long run.
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