Mileage and Subsistence Explained

A business can reimburse its employees and directors for certain motor and travel expenses without the deduction of tax provided certain conditions are met.

Firstly the trip involved must be for business. A business journey is one in which an employee travels from one place of work to another place of work in the performance of the duties of his/her employment but will generally involve a temporary absence from the normal place of work.

Calculating the Journey

Travel from home to work (and vice versa) is generally not considered a business trip. However, where an employee starts a business journey directly from home to a temporary place of work or returns home directly, the business kilometres should be calculated by reference to the lower of:

  • the distance between home and the temporary place of work; or
  • the distance between the normal place of work and the temporary place of work.

Methods of Reimbursement

There are normally two ways to reimburse an employee:

  •  An employee presents an employer with the receipts for expenses (e.g.  hotel bill) and the employer reimburses the employee for this amount

OR

  •  The employee records how many kilometres were travelled and how many hours/nights away and presents these to the employer. If the employer is satisfied he/she will then reimburse the employee at the appropriate mileage and subsistence rates (see below). Mileage rates are dependent on the engine capacity of the car used. Subsistence rates vary depending on the number of hours away from the normal place of work and the employee class.

Records

It is important that the employer retains proper records of each business trip. Otherwise Revenue may insist that salary taxes be applied to these payments to employees. The records required are:

  • Employee name
  • Date(s) of business trip
  • Reason for the trip (e.g. meeting client)
  • Distance travelled
  • Starting point, destination and finishing point of trip
  • Basis for reimbursement (i.e. actual receipt or mileage/subsistence rate)

Records should be kept for 6 years.

Sole Traders

Sole traders themselves cannot claim mileage and subsistence, although their own employees can. Instead sole traders can claim the actual expenses incurred in business trips and should keep receipts for motor expenses, accommodation and other travel expenses. It may be necessary to add back a portion of motor expenses to represent private expenditure when preparing the income tax return.

“Mileage” rates

Travel in Calendar Year Up to 1,200cc 1,201 – 1,500cc 1,501cc +
Up to 6,437km 39.12c 46.25c 59.07c
6,438km + 21.22 23.62 28.46c

 

Subsistence Rates

 

Overnight Allowances

Day Allowances

 

Normal Rate

Reduced Rate

Detention Rate

10 hours or more

5 – 9.99 hours

Class A

€108.99

€100.48

€54.48

€33.61

€13.71

Class B

€107.69

€92.11

€53.87

€33.61

€13.71

.
  • The normal rate is payable for absences up to 14 nights.
  • The reduced rate is payable for each of the next 14 nights.
  • The detention rate is payable for each of the next 28 nights.
  • An overnight allowance covers a period of 24 hours from the time of departure, as well as any further period not exceeding 5 hours, which is spent away from the normal place of work on a business trip.
  • Where an absence exceeds 24 hours, a day allowance at the appropriate rate may be paid only if the last period of 24 hours is exceeded by 5 or more hours.

For absences over 56 nights, employers should make an application to the appropriate Revenue Office. The period of subsistence at any one location is limited to six months.

Certain industries have agreed different rates with the Revenue Commissioners so please check with your representative body.

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