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HMRC consultation calls flat rate mileage and fuel expenses into question

HMRC consultation calls flat rate mileage and fuel expenses into question

Business travel data specialist TMC (The Miles Consultancy) is urging companies to respond to a new HM Revenue and Customs’ (HMRC) consultation that questions whether flat rate expenses such as Approved Mileage Allowance Payments (AMAPs) are still appropriate.

TMC, which captures and processes mileage and fuel expense data from more than 100,000 UK and European drivers, says fleets should take “this important opportunity” to make their voice heard.  

HMRC’s call for evidence about taxation of employee expenses is the latest stage of a four-year review programme by the government. Also involving the Office of Tax Simplification, the programme aims to bring expenses and benefits taxation into line with 21st century working practices and technologies.  

The consultation, which runs until 12 June, was signalled in the recent spring Budget when the government said it was considering how the tax system could be made fairer and more coherent, including by looking at the taxation of benefits-in-kind and employee expenses.

The government says it will use the information gathered from the call for evidence to inform potential future policy development. It said “no decisions” had been made about the various issues outlined.  

The document highlights both AMAP rates and business travel and associated expenses among commonly claimed expenses and is seeking views on current employer practices on employee expenses, current tax rules on employee expenses and the future of employee expenses.

Paul Hollick, managing director of TMC, said: “At TMC we have experienced at first hand the challenging impact of removing flat rate travel subsistence payments last year. As far as we know, there are no plans to abolish AMAPs or the Advisory Fuel Rates. But HMRC is asking the question in this review, so we think it’s important for fleets to respond with their views.”  

TMC’s view is that flat rate expense allowances are beneficial provided they are set at a realistic level. It points out that flat rates mean less paperwork for the driver, the employer and for HMRC as well, since realistic flat rates result in fewer claims for tax relief at year-end.  

Mr Hollick said he also hoped the consultation exercise would lead to a fresh review of the rules on subsistence claims.  

He said: “Until the last Finance Bill, they allowed drivers to use our mileage system to claim a set sum for meals based on time and distance away from home or the office. Now the automatic option has been removed, so employers and drivers have to process receipts for every meal and sandwich they put through. The change, which was not sought by the Office of Tax Simplification, has been really challenging for UK businesses, especially blue collar workers. Restoring the ability to make a simple claim based on the time people spend travelling would be very useful.”  

TMC will submit a formal response to the consultation in due course. The consultation document can be viewed at https://www.gov.uk/government/consultations/taxation-of-employee-expenses-call-for-evidence.