Where employees (or directors) use their private cars or motorcycles for business purposes, re-imbursement in respect of allowable motoring expenses can be effected by way of flat-rate mileage allowances.
There are two types of mileage allowance schemes which are acceptable for tax purposes, if an employee bears all the motoring expenses:
The Revenue also accept two types of subsistence allowance schemes for tax purposes, if an employee pays their own expenses when working away from their normal place of work:
The Department of Public Expenditure and Reform has recently published revised motor travel and domestic subsistence rates for civil servants. The new rates will apply from 1 April 2017.
In the Department’s circular 05/07, the Minister for Public Expenditure and Reform says the revised rates reflect the changes in “technology, road conditions, commuter behaviour, and car ownership patterns”. The previous system of rates and mileage bands date back to January 1999.
The new rates take into account the need to encourage the use of more environmentally-friendly vehicles and methods of transport in line with the government’s policies to reduce carbon emissions as part of the National Policy on Climate Action.
What has changed?
The new formula uses four distance bands of motor travel rates, compared with just two bands previously. It also introduces a lower recoupment rate for the first 1,500km and an increased recoupment rate from 1,501km to 5,500km. The new formula for calculating mileage now assumes that a civil servant officer replaces their car every four years rather than every three years.
The new rates will be of greater benefit to those whose work requires officers to make extensive use of their own vehicle. It also provides a proportional increase for those using smaller, more fuel efficient and environmentally-friendly vehicles. The Department has also confirmed that the formula will be set for a period of three years.
The Department also announced revised domestic subsistence rates for civil servants, which also comes into effect on 1 April 2017.
The ‘5-Hours’ and ’10-hours’ rates remain unchanged but a new overnight rate of €133.73 will apply from 1 April 2017 in recognition of the increasing costs of overnight accommodation.
Due to the particularly high cost of hotel accommodation in Dublin, especially at peak periods, a new Vouched Accommodation (“VA”) Rate for Dublin will be applied up to a maximum of €167.34. This includes the overnight rate plus the ’10-Hours’ subsistence rate. A hotel receipt must be provided when claiming.
If an officer exceeds the cost of a standard overnight rate or Vouched Accommodation Rate as appropriate, they will be solely responsible for meeting the additional accommodation expense.
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