We need to get Barry from his house to our local office to sign a contract (it’s about a mile).

What’s the most expensive way to do it?
Helicopter charter
Hire a limo
Hire a horse and carriage
Ask him to drive it in his company car and reimburse him for the fuel?

Well if that’s not a business mile, then the theoretical cost of option 4 is just under £5,000. If you treat something as business mileage in a company car, and it’s not, the employee should pay the income tax for the full year on the private fuel (and you class 1A NIC), even if it’s just a mile. I know, simply staggering isn’t it?

And it’s worse than that, if you did the above and HMRC picked it up in a review in a future year, they might try to collect the tax and NIC for all of your employees with company cars for the current year and the last four on the assumption that this was a systematic error, i.e. that your systems weren’t competent to differentiate a business mile from a private one, with interest and penalties on top.

Should have gone with the helicopter.

We’re covering this subject on our 4th free 30 minute webinar on Wednesday 29th at 10am. If you want to attend and haven’t received an invite, please message me.

Related article

https://hrux.co.uk/2020/04/29/what-is-a-business-mile/