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A Guide To Mileage And Subsistence For Employees

April 15, 2016 Expenses 0 Comment

 

Mileage and Subsistence The Basic Rules

Where directors and employees necessarily incur expenses of travel and subsistence (relating to the travel) in the performance of the duties of their office or employment the reimbursement of such expenses may within certain limits be made tax free.

The following conditions must be met:

  1. The director or employee must be temporarily away from their normal place of work in the performance of the duties of their office or employment.
  2. The travel expenses must be necessarily incurred in the performance of the duties of the office or employment.
  3. The expenses of subsistence must attach to travelling necessarily incurred in the performance of the duties of the office or employment.
  4. If these conditions are not met any reimbursement of expenses is liable to PAYE/PRSI as if it was a payment of wages.
  5. Sole traders cannot claim mileage and subsistence using the civil service rates but should instead keep receipts for the business portion of motor running expenses (fuel, motor tax, motor insurance), hotels and other business expenses incurred.

Your Normal place of work

The basis of the tax free reimbursement of expenses is based on the premise that the director or employee is temporarily away from their normal place of work in the performance of the duties of their office or employment.

The “normal place of work” is the place where the employee normally performs the duties of his/her employment. In most cases, this should not give rise to difficulty.

The normal place of work of an employee may not necessarily be the place of business of the company. While there isn’t a comprehensive definition of “normal place of work” the Revenue Commissioners have stated that the normal place of work of company directors is where the duties of the office are normally performed.

This would suggest that directors would need to spend the majority of their time at the company’s premises to claim it as their normal place of work.

The employer’s business premises will be regarded as the normal place of work for an employee where:

  1. Travel is an integral part of the job involving daily appointments with customers; or
  2. The duties of the employment are performed at the various premises of the employer’s customers but substantive duties are also performed at the employer’s business premises.

If a director or an employee spends little or no time at their employer’s place of business and all their time, for example, on site, the Revenue may argue that the normal place of business of the director is in fact the site and not the employer’s place of business.

This would mean that the journeys from home to site are not business journeys from a normal place of work to a site but rather a journey from home to work which cannot be reimbursed tax free.

An employee’s home would not be regarded as the normal place of work unless there is an objective requirement that the duties of the office or employment must be performed at home.

It is not sufficient for an employee merely to carry out some of the duties at home.

Download The Entire Guide To Mileage And Subsistence

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