How To Claim Back Business Mileage
The HMRC do not clearly state what makes a business mileage record compliant or non-compliant, therefore making it difficult for a business to know whether the process of claiming back business mileage that they have in place currently meet the needs of HMRC. We want to help you understand the different methods of claiming back business mileage, these being: Manual mileage claim, digital mileage solution, mobile app solution and a hardware solution.
MANUAL MILEAGE CLAIM
The process of a compliant manual mileage record is broadly split into 4 phases:
1: The driver manually documents each business trip using a mileage claim form and should include all HMRC compliant information below:
- Details of the vehicle (vehicle registration, make, model, fuel type and engine capacity)
- The driver
- The date
- Trip start and end location including postcode
- The purpose (place/companies visited)
- The start and closing mileage
- Total business mileage
- The mileage rate
2: The driver signs and delivers their complete mileage record to an administrator to be quality checked, processed and stored.
3: The Administrator quality checks the mileage record and returns it to the driver if information is inadequate or missing. Administrators also manually account for vehicle changes, fluctuations in Advisory Fuel Rates (AFRs), and use these to calculate the cost of private/business allowances for payroll.
4: The mileage record is filed for 6 full years in preparation for a potential HMRC Business Record Check (BRC).
See example of a UK HMRC mileage claim form here:
It is clear that a manual mileage process may leave a business vulnerable, but how can a business protect themselves and improve this process? Is there a better solution that is both HMRC and privacy compliant? To meet compliance, quality standards and simultaneously reduce costs and increase efficiency - businesses are turning to technology - one such technology is known as a ‘digital mileage claim system’.
DIGITAL MILEAGE SYSTEM
A digital mileage claim system is based on GPS technology that captures trip data automatically, and consequently improves data accuracy and reduces manual administration. There are two main GPS solutions, one is an app that utilises the GPS of the driver's mobile phone (mobile app solution) and one utilises a GPS device fitted to the drivers vehicle (hardware solution). There are pros and cons to each system, but an effective digital mileage claim system will provide a variety of benefits to each of the four phases of the mileage claim process outlined above.
MOBILE APP SOLUTION
The mobile app solution is a cost effective and easy to implement way to improve the mileage claim process, however, it does not solve some compliance issues. The mobile app solution requires drivers to download a mobile app that utilises the GPS of the mobile phone to automatically track location and record trips. A driver can then administrate these trips within the app and add any missing HMRC compliant information – such as the trips purpose. When the mileage claim is due, the consistently formatted digital mileage claim record is emailed to an Administrator to quality check, process and store. The mobile app solution is an improvement on the manual process with improved data accuracy and reduced administration time for the driver. It may be very useful for a driver that completes sporadic business trips, but is it not the perfect solution. A big issue is how intensive app solutions are on mobile battery life. Anyone who has run continual GPS in the background of their phone will know that the battery will last a matter of hours. Additionally, and more importantly, the mobile app is not HMRC compliant. Manual back up processes will be required to cover a host of potential issues. The more manual input, the more inaccuracies and the more time-consuming the process. For example, what happens if the driver…
• Forgets to start and stop the app for the trip?
• Takes a private detour on a business trip?
• Changes vehicle?
• Has no access to their phone?
Finally, there are no significant improvements to phase 3. Some calculations may be completed automatically but the administrators process is still manual and time-consuming.
With the ABAX Triplog app, you get the first 15 trips free, so you can try the mileage claim process before you're ready to buy it!
The hardware solution requires each vehicle to be installed with a GPS device that consequently eradicates all of the major drawbacks of a mobile app solution. An effective hardware solution will be more expensive than mobile app only, but the improvements to both the manual mileage claim process and to other areas of the business will actually provide a faster return on investment. If a hardware solution is not cost neutral, it is not a good one. Different hardware solutions vary greatly in cost and functionality, but in general, both the driver and the administrator are given access to an interface. The driver interface (usually an app) is used to manage and deliver business trips and the administrators interface is used to process and store the mileage records. Assuming the hardware solution is effective, the whole process should be paperless, HMRC compliant, privacy compliant, drastically reduce administration time and reduce fleet related costs. Once implemented, expect each driver to save 2-hours per month on administration, and Administrators to save 45-minutes per driver, per month.
This short video shows you to mount and install the ABAX Triplog onto a vehicle:
Check out the ABAX Triplog here for simple and effective digital mileage claims, to make claiming back business mileage an easy process!