If you have a vehicle that is used for business purposes, you can claim its full running costs as an expense. Inland Revenue has just adjusted its vehicle kilometre rates for 2021.
For employers, this new development from Inland Revenue isn’t good news, as employers will need to quickly update mileage reimbursement systems. This is the first time the rate has decreased since 2016.
The reason for the lower rates is because of lower fuel costs due to the Covid-19 pandemic, with fewer people commuting due to the rise of working from home and no longer needing to travel into the office.
Keeping a logbook is a typical way to track your expenses and to keep track of your different trips. Travelling from work to home is counted as a personal trip and can’t be claimed so its important to keep records to find out exactly how much you use the vehicle for business to accurately calculate deductions.
Employers reimbursing employees for work-related travel will need to review their policy as to make sure to not disadvantage employees.