Expense Claims by Employees (Mileage & Subsistence)
The issue of paying mileage and subsistence payments to employees is one which arises very often. We thought it would be useful to summarise these matters and to provide a reference point to many of the question you/your employees may have.
This is an area fraught with difficulty, as Revenue will pay particular attention to any tax-free payments made to employees and directors of a company. It is an issue that always arises in the context of a Revenue enquiry/Revenue audit.
It is important to emphasise that it is the sole responsibility of the employer to ensure that only correct payments are made. Any tax risk of making inappropriate or excessive payments rests entirely with the employer.
The employer can always choose to either pay the mileage/subsistence rates applicable, which are outlined and explained below, or to reimburse the employee for actual costs incurred. An employee cannot claim both reimbursement and the applicable rates.
It is essential that, regardless of which method is used:
- All expense claims are prepared by the employee.
- All expense claims are reviewed and approved by the employer.
- Expenses are paid only in accordance with expense claims.
- “Round Sum” expenses should never be paid, as these are taxable.
- Records are kept for at least 6 years, for Revenue purposes.
Revenue pay particular attention to any kind of tax-free payments to employees/directors. The risk of making inappropriate or excessive payments to employees rests entirely with the employer.
Revenue pay particular attention to companies whose only employees are the directors. In particular, there are quite stringent interpretations of what constitutes the “normal place of work”.
A separate methodology is available for employees who are “site-based”. The following outlines the rules under both (i) “normal” travel and subsistence and for (ii) site-based employees.
Normal Travel & Subsistence
- Payable once the employee is away from their “normal place of work”.
Normal Place of Work:
- Defined as “the place where the individual normally performs the duties of his/her employment”.
- Substantive duties must be carried on in the “normal place of work”.
- With rare exceptions, an employee’s home can never be considered his “normal place of work”. This means that travel to/from home is not allowed.
- Employees such as salespeople, who are generally travelling, can regard the company base as their “normal place of work”.
- Employee must be more than 8km away from their “normal place of work”, in order to get either “mileage” or “subsistence” payments.
- Subsistence: Employee must be at least 5 hours away from their “normal place of work” in order to get “subsistence” payments.
Different “day allowances” are payable, depending on how long an employee is away. These allowances are payable to reimburse employees towards the cost of meals, etc during a day.
There is also an overnight rate. In order to get this overnight rate, the employee must be away from their “normal place of work” for at least 5 hours in the following day. In addition, the overnight rate (normal, reduced or detention) depends on how many consecutive overnights are claimed. This allowance is payable to reimburse employees towards the cost of accommodation.
There are different rates for foreign travel, which are not covered in this note. If you need details of these, please contact us.
- Mileage: Rates depend on the engine capacity of the vehicle involved. Rates are identical for electric / hybrid cars. The mileage rate also depends on the annual mileage.
- Revenue publish approved “civil service” rates for both “mileage” and “subsistence” rates, which can be accessed here
There are special rules for hauliers. If you need details of these, please contact us.
- These employees cannot get normal “mileage” or “subsistence” expense payments as the company base would not be regarded as their “normal place of work”.
- Expenses of travel and subsistence may be paid tax free to a site-based employee, up to the ‘country money’ rates below.
- This allowance is only available where the employee is working at a site that is 32km (20 miles) or more from the employer’s base. If the employee is Dublin based, the allowance only applies if they are working 32km or more from the General Post Office (GPO).
- Country Money Rates
- €181.68 per week for more than four days
- €36.34 per day for four days or less
Expenses may not be paid tax free where the employee is:
- provided with transport to and from the site by the employer, or
- provided with board and lodgings by the employer, or
- recruited to work at one site only, also known as ‘jobbed on site’.
- An “eating on site” allowance of up to €5 per day is payable where the above rates are not applicable and where certain other conditions are satisfied.
If you have any queries in relation to this area, please call your usual PSC contact.