Mileage and Subsistence

Current rates can be found here.

Generally, an employee or director is liable to tax on expenses received from an employer. However, where an employee or director incurs motor or subsistence expenses in the performance of the duties of their employment/office then the reimbursement can be made tax free with certain conditions.

Employees or directors must be on a business journey from their normal place of work to claim tax free mileage and subsistence.

Update: Sole traders themselves cannot claim mileage and subsistence using the civil service rates but should instead keep receipts for business portion of motor running expenses (fuel, motor tax, motor insurance), hotels etc.

Mileage

Remember that travelling to and from home cannot be claimed as mileage. Where an individual sets out on a business journey directly from home without calling into the office or where the employee or director returns home directly from a customer’s business premises, the distance travelled is decreased to be the shorter of (i) the distance between home and the customer’s business premises and (ii) the distance between the office / normal place of work and the customer’s business premises.

There are two normal methods of tax free reimbursement of expenses from an employer to an employee/director.

1. The repayment of the expense incurred by the employee/director for travel or subsistence on production of a receipt by the employee/director, for example a petrol receipt or a receipt for a hotel.

2. Using mileage rates within current civil service limits. This method of reimbursement can be done without the production of receipts but detailed records relating to each business trip must be kept and retained 6 years. The rates depend on the cc of the car and can be found here.

Records

In order for a reimbursement to be made without the deduction of PAYE/PRSI a detailed record of all journeys must be maintained, and include the following:

• Name and address of employee/director
• Date of the journey
• Reason for the journey
• Distance
• Starting point, destination and finishing point of the journey
• Basis for reimbursement of the travel expenses e.g. meeting client.

Without this record the Revenue Commissioners may be in a position to apply PAYE/PRSI on reimbursements. All records relating to reimbursements should be retained by the employer for examination in the event of an audit.

Subsistence

An overnight allowance covers a period of 24 hours from the time of departure, as well as any further period not exceeding 5 hours, which is spent away from the normal place of work on a business trip.

• Where an absence exceeds 24 hours, a day allowance at the appropriate rate may be paid only if the last period of 24 hours is exceeded by 5 or more hours.
• The normal rate is payable for absences up to 14 nights.
• The reduced rate is payable for each of the next 14 nights.
• The detention rate is payable for each of the next 28 nights.

For absences over 56 nights, employers should make an application to the appropriate Revenue Office with a view to agreeing the rate to be applied.

The period of subsistence at any one location is limited to six months.

As with mileage, proper records must be kept.

Subsistence rates can be found here.

Certain industries have agreed different rates with the Revenue Commissioners, such as “country money” for construtions workers and electrical contractors and various subsistence rates for road haulage drivers. It is worth checking with the representative body of your industry (e.g. Road Haulage Association) to see if specific rates have been agreed with the Revenue Commissioners.