Mastering Mileage: How to Easily Calculate Car Mileage

Mileage Allowance Rate

HMRC mandates the standard mileage allowance rate every year. It’s currently set at 45p per mile for the first 10,000 miles. This rate considers depreciation, maintenance and operating costs, and determines the mileage rate for business purposes. This is the most commonly used method of calculating reimbursement as it’s the easiest.

Actual Expense Method

Another option is the actual expense method. This method requires calculating the actual costs of using your vehicle for business needs, taking fuel, insurance, maintenance, and depreciation into account. It is more complicated than some of the other options to work out.

GPS Apps

Smartphone apps, like Concur Drive, and GPS trackers calculate mileage easily and accurately using GPS technology. Not only that, you can automatically upload this mileage as expense claims to Concur Expense, streamlining the mileage reimbursement process

Good Ol’ Odometer

For many years, mileage was calculated by recording the odometer readings at the beginning and end of a trip, and simply using subtraction to calculate the total miles driven. Many still use this manual method, however, due to human error, it’s often riskier and subject to mistakes.

Calculating Mileage Reimbursement

The good news is, it’s reasonably straightforward to calculate your mileage using cloud-based, AI powered apps. The key is ensuring you’re using the correct calculations. If you prefer manual mileage capture, the Concur Drive app can help you there, too. You can easily switch back and forth between the two methods. The steps below can guide you.

Step 1 – Business Mileage Records

The more detailed records you keep, the better you are able to calculate miles travelled and provide proof if required by your employer. You can rack up miles by driving to meetings with clients, running business errands, or making site visits. Any time you must drive for work, you should calculate the miles. No matter where you’re travelling, Concur Drive. It measures kilometres or miles and can be used around the world.

Step 2 – Know Your Reimbursement Rate

Even though HMRC has set the rate to 45p per mile, that may not be the rate your company uses. You should always check with your organisation to verify their reimbursement rate. While the rate they’re using should be based on the one set by the HMRC, there could be a few reasons why an organisation’s rate differs. For example, some organisations may pay less than the HMRC rate to save money. You can claim the difference as Mileage Allowance Relief (MAR) from HMRC.

Step 3 – Calculate the Amount

The mileage reimbursement formula is simple:

(total miles for business) x (the reimbursement rate) = amount of reimbursement

Let’s look at an example: Say this year you drove 600 miles for work purposes. The reimbursement rate is 45p, 600 x 0.45 = £270

Step 4 – Other Factors

There could be other factors that impact the rate you receive. If your business provides a company car to you, the rate they allow you to reclaim may be lower. With Concur Drive, you can easily set parameters to help you calculate your miles accurately.

Step 5 – Submit the Report

Your employer likely has a specific type of format for their expense reports. It’s essential that you follow their process and provide all requested information. Details should include all information about the trip, miles driven, and reimbursement amount. You should keep a copy of all records including any fuel receipts if requested.

Best Practices for Mileage Calculation

When it comes to understanding how to calculate mileage, it’s important to get it right. The following tips should help you calculate your mileage accurately.

No matter if you’re tracking your mileage for tax purposes or employee reimbursement, you should:

• Record your mileage accurately and immediately. Don’t rely on memory. Using Concur Drive gives you a reliable and useful way to track mileage.
• Your records should be detailed and accurate. Include the miles, where you started and stopped, and the date and purpose of the trip.
• Always review your records and verify their accuracy. You want to do your best to catch errors. Use a mileage reimbursement calculator to ensure your numbers are correct.
• When tracking mileage for employee reimbursement, draw a distinct line in the sand between business and personal travel.
• Follow all your company’s best practices for how to calculate employee car allowance for accurate reimbursement.
• For employee reimbursement, use consistent and reliable methods to track and calculate your data.
• Verify mileage with map applications. These tools can give you the distance of specific routes. You can use them to confirm your calculated mileage.

Combining these tips with easy to use tools like Concur Drive will help you capture and calculate your miles correctly for both reimbursement and tax purposes.