For many companies, business mileage logs and mileage sheets are one of the best ways to seek tax relief and record business miles. This makes mileage logs an important tool for fleet managers because of their ability to document employee’s business driving. In the event of an audit, an accurate and defensible mileage record is a powerful resource for a company with a fleet.
Unfortunately, many businesses still rely on outdated paper mileage sheets which lead to inaccurate mileage logs. To improve the accuracy and utility of your business mileage records, it is important to adopt digital mileage sheets through innovative fleet management software solutions.
In this article, we discuss the importance of digitised business mileage logs and provide a customisable template to help improve how you track company-related trips. What you can find in this article:
- Free Mileage Log Template Downloadable
- How to do I use a mileage log template
- What is a mileage tracker and why do they matter?
- Should I digitize my mileage tracking?
- How do I calculate my business mileage deductions?
Mileage Log Template
Before we go on to explain the ins and outs of a mileage log, please go ahead and download our free mileage log template below. These mileage sheets are a great template for the fleet manager looking to digitalise their fleet process.
Get a Free Mileage Log Template
Once you have downloaded our free mileage log template, follow the instructions below on how to use the mileage log template and how to automise the mileage log template with fleet tracking.
How to use your mileage log template
On your mileage log template you will find a space to record the date, purpose and miles of each journey. Always fill these parts in your mileage log template.
The pre-existing formula in the mileage log template will automatically update the “total” miles traveled. At the end of every month, you can then calculate the total number of business miles traveled and claim money back from your company.
Find out how to calculate reimbursements in this section.
Using mileage log template with fleet tracking
High-performing fleet tracking, like Vimcar’s Fleet Geo, tend to offer Data Export features. This allows users to track their fleet’s vehicles (company cars and/or pool cars) and then download that data straight into a mileage sheet or spreadsheet.
That way, filling in your mileage log template is a nearly-instant process and can be done at the end of the month, instead of on a day to day basis.
What Is A Mileage Tracker/Mileage Log & Why Is It Important?
A mileage tracker is a tool for calculating the number of miles travelled while a mileage log is a record of accumulated miles on trips over a specific period. The HMRC requires companies to track their business miles every year for a minimum of six years. This information is essential for claiming tax returns and the HRMC will need accurate records to verify your business trips.
Most companies used to track business travel with a pen and paper. However, this approach is inefficient. Because of human error and other factors, employees can forget to record all their business travels. It can also be difficult to complete mileage logs accurately. Sometimes, an employee will forget to include vital information such as dates, start and end destinations, and other important details. A paper mileage tracker can also be lost or destroyed by the elements.
An improvement over the old paper mileage logs is the digital spreadsheet. However, drivers still need to record their business miles on the spreadsheet manually. While spreadsheets are safe from the elements, they are not protected from human forgetfulness and sudden system failure, especially when you don’t back up your records.
So how do you create accurate business mileage records that will stand up to HMRC scrutiny?
Automated mileage tracking tools are the most effective solutions for recording business miles. A good example is the integrated fleet management software with vehicle tracking capabilities from Vimcar.
With Vimcar’s vehicle tracking software, you get precise, digitised records of company car trips, route information, and other vital information for effective fleet management. Vimcar allows you to export mileage records and other important travel data for all company vehicles in different file formats.
Accurate and defensible mileage records guarantee you will get the tax relief your business deserves whenever the HMRC checks your books.
Why Is It Important To Digitise a Mileage Tracker?
Digitised mileage tracking is the best way to log business trips accurately while also complying with HMRC regulations. Here are benefits of adopting a digitised mileage tracker:
1. Improved accuracy
Considering the fast-paced nature of business environments, it is easy to see why about 90 percent of drivers submit inaccurate mileage claims. Digitised mileage tracking eliminates exaggerated and inaccurate journey records. You don’t have to round up miles or inflate them because someone forgot to take accurate records.
2. Ease and time saving
Digitised mileage tracking eliminates the need for drivers to put pen to paper for mileage tracking. It also reduces the time fleet managers spend reviewing mileage claims. Vimcar’s plug-and-play vehicle tracking tool provides an easy-to-use vehicle route tracking functionality that takes precise records of business miles with no manual input. This helps save time and effort, allowing employees to focus on satisfying customers and moving the company closer to its goals and objectives.
3. HMRC compliant
According to one estimate, 93 percent of SMEs won’t pass a HGV laws on mileage inspection because of inaccurate and incomplete records. A digitised mileage tracking system will record and store every trip, providing accurate records that are HMRC compliant.
4. Safer records
Most digitised mileage tracking solutions store information in the cloud. This means you won’t lose your mileage records in the event of a computer crash, cyberattack, or natural disaster. Automatic mileage trackers provide an added layer of redundancy that significantly reduces the chances of losing mileage records.
5. Higher tax benefits
If you have a company fleet, a digitised mileage tracker makes it easier to calculate the VAT amount claims on your fuel spend. It also simplifies claiming tax benefits on business mileage. And the system allows fleet managers to distinguish between business travel and personal trips.
How To Calculate Your Business Mileage Deduction Using A Mileage Log
Managing your business mileage log is an excellent way to seek tax relief when tax season arrives. The HMRC requires all businesses to keep a mileage for every employee, every year. With the right mileage tracking tool integrated with your fleet management software, you can keep accurate logs for tax reasons.
The HMRC sets mileage rates employees can use to claim expenses per business mile travelled. These claims are vital for any employees using personal cars for work-related travel. Let’s see the mileage rates for 2020 and how you can use them to calculate your business mileage deduction.
What are business miles: your business’ closest companion
“Business miles” refers to the distance that a vehicle covers from one place to another while on business duties. Proper recording of the miles is indispensable for reducing the amount payable when filing the Her Majesty Revenue and Customs office (HMRC) tax returns. Therefore, paper documentation of these miles covered by your fleet of cars or trucks is a less effective measure when it comes to saving money.
Read More: How Can You Save Money with Benefit-In-Kind?
Mileage rate for 2021
- Cars and Vans: 45 pence over the first 10,000 miles and 25 pence above 10,000 miles
- Motorcycles: 24 pence per mile
- Bicycles: 20 pence per mile
- Passengers: 5p per passenger carried in a car or van for a work trip
Calculate mileage deductions on your tax returns
Multiply the miles travelled by the mileage rate for the current tax year. For example, if you travel 10,000 miles away from work on your personal vehicle, with a mileage rate of 45, you can claim:
- 10,000 × 45p = £4500
If you pay taxes at 20%, your claim is worth:
- £4,500 @ 20% = £900
If you pay taxes at 40%, your mileage log tax rebate is worth:
- £4,500 @ 40% = £1,800
Can you claim a mileage tax refund if you have an employer?
If you’re taxed for a mileage allowance, you can claim back all approved mileage rates. If you have an untaxed mileage log allowance, you can claim the difference between approved mileage rates and what you’re paid. You are ineligble for tax claims if your employer has paid you the full approved mileage rates.
Let’s say you are an employee and receive less than the allowed mileage payment allowance. You can claim the remaining unused allowance.
For example, say you travel 5,000 miles for the tax year, and your employer reimburses you 30p per mile of business travel.
- 5000 × 30p = £1500
The allowed HMRC mileage rate for the first 10,000 miles is 45p per mile. So your remaining reimbursement is:
- 5000 × 15p = £750
You can apply for tax relief on this balance and save on tax on your highest tax rate. Let’s assume 40%.
- £750 @40% = £300
What if my mileage log has more than 10,000 miles?
If you cover more than 10,000 business miles during a tax year, apply a 45p rate to the first 10,00 miles and 25p to the other miles.
Let’s say you cover 15,000 business miles. Your claim will be:
- (45p×10,000) + (25p × 5,000)= £5,750.
However, since this amount is above £2,500, you need to complete a self-assessment tax return to get the claim.
Read more: What is fleet insurance?
Can I claim if I carry a passenger on a business trip?
The current rate for a passenger in your car for a work-related trip is 5p. However, you cannot claim this passenger allowance if your employer does not pay it, or if their passenger allowance is less than 5p per mile.
Final Words On Mileage Logs
Adopting fleet management practices is essential for getting maximum returns on investment from company vehicles. Using digitised logbooks and mileage trackers can help provide accurate records of your business trips, offering tremendous cost-reducing and tax benefits. a fleet management software provides a wide range of tools, including real-time vehicle tracking and digitised mileage records to simplify administrative and legal obligations.
Why is recording business miles so important?
Accurate mile tracking improves the efficiency of tending to your business in a variety of ways:
- These miles are one of the legal ways to cut your HMRC payments substantially.
As of 2020, HMRC offers 45 percent tax relief on the first 10,000 miles, and a 25 percent tax relief after that. Therefore, recording your business expenditures effectively is an essential factor in clarifying whether you receive a 45 percent or 25 percent tax relief.
Read More: View Our Company Car Tax Guide
Also, proper tracking, whether autimatic or with a mileage sheet, will ensure you do not miss out on tax relief, therefore maximising your profit margins. The claimed tax reliefs serve to increase your profit margins and play a massive role in creating more capital to further grow your business.
So, how do you benefit further from recording your business miles?
- Save time and stress when filing tax returns. The regular recording and documentation of business miles make the overall filing of your annual tax returns and claiming your tax relief much easier. For instance, the industry-renowned fleet tracking, Vimcar’s Fleet Geo, offers data export features that download the data into a spreadsheet.
- Improve customer satisfaction. The COVID-19 pandemic has changed the outlook for most – especially business owners. For instance, companies have to offer delivery services of their products right to the doorstep of their clients. This new norm is likely to persist even after the pandemic has dwindled. Therefore, timely delivery to meet the customers’ demands is essential in creating a competitive advantage over your business’ competitors. Furthermore, satisfied customers are more likely to refer you within their social circles, increasing your market reach.
- Optimise your vehicle routes. A history of the routes that your car has taken while on business engagements serve to get rid of time-wasting stops and expensive long journeys, not to mention route overlaps. This saves your fuel costs and long delivery times, in addition to monitoring your drivers’ performance.