New rates – Mileage & Travel Expenses

New rates for travel expenses - Fenero

Changes to Mileage & Subsistence
(Domestic & Foreign) Rates – Effective 1 April 2017

The Department of Public Expenditure & Reform has recently announced changes to Civil Service mileage and subsistence rates. This has an effect beyond the Civil Service however as these rates can be used by non-public sector employers and are commonly used as a benchmark throughout the economy.

The Civil Service rates are also used by Revenue as the maximum allowable for tax purposes by any company. Therefore these are the rates that contractors can use to maximise their expenses – under both Umbrella Company and Private Limited Company solutions. Indeed, any self-employed person operating through a limited company can also use these rates.

The changes take effect from 1 April 2017. It has been agreed that the rates will not change for a period of 3 years.

Mileage

The Minister says that the mileage rate changes are aimed at benefiting those who use their car extensively for business travel and also to provide a greater proportionate benefit for those using smaller, fuel efficient vehicles.

The main changes are:

  • There are now 4 distance bands with different rates attached to each, compared to 2 previously
  • A lower rate than before now applies for the first 1,500km travelled each year
  • Increased rates apply to cars with lower engine sizes

 

The rates applicable from 1 April 2017 are:

Motor Travel Rates per kilometre

Distance Bands Engine Capacity up to
1200cc
Engine Capacity
1201cc to 1500cc
Engine Capacity
1501cc and over
Band 1 0 – 1,500km 37.95 cent 39.86 cent 44.79 cent
Band 2 1,501 – 5,500km 70.00 cent 73.21 cent 83.53 cent
Band 3 5,501 – 25,000 km 27.55 cent 29.03 cent 32.21 cent
Band 4 25,001 km and over 21.36 cent 22.23 cent 25.85 cent

 

Travel carried out between 1st January and 31st March will not be affected by these new rates and bands – that is they should be claimed at the old rates. However, travel from 1st January 2017 will count towards the 2017 cumulative totals which the new rates will be calculated against.

 

For example:
Your car has an engine size of 1,400cc. You have travelled a total of 2,600km between 1 January and 31 March. From 1st April, you would automatically start within Band 2 rates because you already had a mileage total of 2,600km since the start of the year. From 1 April 2017, you would be entitled to claim 73.21 cent per km for all further mileage during the year up to 5,500km. Band 3 rates would apply for further mileage beyond 5,500km.

Subsistence

The main changes include:

  • Increased rates for overnight stays to €133 in recognition of the increasing costs of overnight accommodation. No changes made to the day rates.
  • Introduction of a vouched accommodation rate for Dublin. The Minister says this is in recognition of higher accommodation costs in the capital. Under the vouched accommodation rate, you can claim up to a maximum of €167.  However, this higher amount can only be claimed with a supporting hotel receipt.

For example:
You need to stay overnight in Dublin and will be staying in a hotel. The hotel costs €155 per night. You can either claim €133 if you do not supply a hotel receipt or you can claim the full €155 by supplying a hotel receipt. The maximum cost which will be covered is €167. Therefore, if your hotel cost €180 per night and you supply a receipt, Revenue will seek to restrict your total allowable claim to €167.

Foreign Subsistence Rates

Changes have also been made to subsistence rates claimable for travel abroad. The full list is available at:
circulars.gov.ie

 


If you found this article useful, you may like to read about Claiming Tax Relief on Travel to your Normal Place of Work.

Fenero are Personal Tax Experts to contractors. If you need tax advice get in touch!

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