Motor Expenses

Image

An employer may reimburse an employee who incurs expenses whilst carrying out their duties where the expenses are incurred wholly, exclusively and necessarily in the performance of their duties.

For this purpose employees includes the directors of the company (see note below for non executive directors and voluntary work).

The expenses are generally reimbursed on the basis of vouched receipts. However in certain cases such as expenses which relate to business travel (cost of travel, accommodation and meals) reimbursement can be made tax-free in certain circumstances

  1. The employee is temporarily away from their normal place of work (see below) in the performance of the duties of their employment.
  2. The travel expenses must be necessarily incurred in the performance of the duties of the employment.
  3. Where subsistence expenses are also paid, the subsistence expenses must be incurred as a result of travelling in the performance of the duties of the employment.

Reimbursement can be based on the actual cost incurred or the employer can use the approved Revenue approved Civil Service rates

When calculating mileage it is important to remember that travel between home and work is private travel and cannot be paid tax free. Also where the jpurney starts from home, the mileage paid is the shorter of home to destination and work to destination.

Normal Place of Work

The normal place of work is where the employee works on a day to day basis. This may not always be the employer’s base. he business may have additional bases elsewhere which means, in such cases, that the normal place of work may not be the same for all employees.

Normally, an employer will provide the facilities your employees need to perform their duties at the normal place of work.

The revenue do not usually consider the employee's home as their normal place of work. An exception to this is where there is an 'objective requirement' that their duties be carried out at home. Their duties have to be carried out at home because they cannot be carried out elsewhere. It is not an objective requirement if:

  • your employee merely carries out, or chooses to carry out, their duties at home
  • the duties carried out are incidental (minor or administrative).

Reimbursement Rates 

The current reimbursement rates can be found here

Screen Shot 2019 04 21 at 07.41.45

 

Electric Vehicles

Minister Paschal Donohoe in answer to a parlimentary question on 21 May 2019 stated in relation to all electric vehicles : 

"All-electric vehicles, including both cars and electric bicycles, are a relatively new and developing technology. Comprehensive information such as that available for petrol/diesel driven cars is not yet available for electric vehicles and, as a consequence, it has not yet possible to devise a mileage rate for electric cars and bicycles in the same manner as for petrol/diesel vehicles. The current policy of my Department is that civil servants using all-electric vehicles may claim reimbursement at the lowest mileage rate (0 – 1200 CC) which currently stands at 37.95 cent per kilometre. This policy will be kept under review and will be adjusted as appropriate as the situation with electric vehicles becomes clearer. "

Motor cycles and bicyles.

Different rates apply for motor cycles and bicyles.

Self Employed

Whilst directors of companies can use the civil service mileage rates, the revenue approved mileage rates do not apply to self employed persons (ie sole trader and partnerships). For such tax payers, the total motor expenses for the year must be calculated and then a percentage taken for the business usage. Revenue have issued guidance on Travel Expenses - When are they wholly & exclusively for the purpose of the trade

Voluntary Work

Revenue have confirmed that for voluntary work, that the organisation may pay expenses for travel and subsistence to individuals who work for the organisation on a voluntary and unpaid basis. These expenses are tax-free provided:

  1. the organisation’s functions and aims are both altruistic and non-commercial (for example, registered charities or sports bodies)
  2. the expenses are needed only to allow the unpaid person to carry out his or her work
  3. the expenses paid are only to reimburse the person for expenses they actually incur.
  4. The payments must not be higher than Civil Service rates for repayment of travel and subsistence expenses.

If a person receives a wage, bonus or honorarium from work for a charity or sports body, they cannot also receive travel and subsistence expenses tax-free.

Members of non commercial bodies

A non commercial organisation may pay tax free travel and subsistence expenses to certain members where these expenses arise from attending the organisation's meetings. 

A ‘member’ is a person holding an office within that body. They must also have no other duties in relation to that body.

The exemption only applies where the members generally carry out their work at such meetings.

A 'non-commercial body' is a body:

  1. organised solely for purposes other than profit and operates not for profit
  2. whose income is used by the body to assist it in achieving its purposes
  3. that does not provide any of its income for the personal benefit of any officer, employee, member or connected person. Wages, salaries, fees or honorariums for services rendered are not counted as personal benefit.
  4. A non-commercial body can be in either the public or private sector.

To qualify for the exemption, a member’s annual pay (excluding travel and subsistence) must not exceed a certain amount. This amount is:

  • €24,000 in the case of the chairperson
  • €14,000 in the case of other members.

The exemption covers expenses up to the Civil Servcie Rates.

Where a person works for the organisation for less than 12 months then the the amount of pay needs to be revised to arrive at an annualised ( 12-month) figure to determine if the person is eligible for the exemption.

Non Executive Directors

Revenue have clarified the position for payment of travel and subsistence expenses for non executive directors.

(a) Non Irish Resident NEDs

From 1 January 2016, an organisation can pay travel and subsistence expenses tax-free to their non-resident NEDs where they are attending company meetings. 

These expenses can be made tax free where all the following apply:

  1. the director must be a NED of the company
  2. the director must be non-Irish resident
  3. only vouched amounts (the Civil Service rates are not available) are covered
  4. the meetings attended by the director must be for the purposes of conducting the business of the company.

(b) Irish resident NEDs

From 1 January 2017, an organisation can pay travel and subsistence expenses tax-free to their resident NEDs where they are attending company meetings. 

These expenses can be made tax free where all the following apply:

  1. the director must be a NED of the company
  2. the director must be Irish resident
  3. the meetings attended by the director must be for the purposes of conducting the business of the company
  4. the Civil Service rates are used to calculate expenses
  5. the director’s annual pay (excluding travel and subsistence) must be no more than €5,000.
  6. If a director serves for less than a year you must revise the amount of pay to an annualised figure. We use the revised figure to determine if the member is eligible for the exemption.

If an organisation pays expenses at rates higher than the civil service rates then tax is payable on the excess.

Further Reading 

Revenue have issued detailed guidance : 

Search