Company Cars – changes to motoring expenses

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The flat rate motoring expenses for the Civil Service have been changed from 1 April 2017. As these rates are also used by Revenue as a maximum allowable in the private sector, the change affects anybody in receipt of business mileage payments.

Motor Cars effective 1 April 2017

Band	Distance	Engine capacity:  up to 1,200cc	Engine capacity: 1,201cc to 1,500cc	Engine capacity: 1,501cc and over
Band 1	1 – 1,500 km	37.95 cent	39.86 cent	44.79 cent
Band 2	1,501 – 5,500 km	70.00 cent	73.21 cent	83.53 cent
Band 3	5,501 – 25,000 km	27.55 cent	29.03 cent	32.21 cent
Band 4	Over 25,001 km	21.36 cent	22.23 cent	25.85 cent

The new rates benefits smaller cars, since the rates more closely reflect the cost of providing a car for work and differentiate between incidental travel and a lot of travel. The underlying formula assumes that the car is replaced every four years instead of the previous three years. The table above shows the new bands and reimbursement rates.

While business travel between 1 January 2017 and 31 March 2017 will not be affected by the introduction of these new bands and rates, business travel from 1 January 2017 will, however, count towards aggregated mileage for the year.

For example, an individual driving a car in the 1200-1500cc engine size who had claimed 1,400km on 1st April 2017 would then move to the new Band 1 and receive 39.86 cent per kilometre. Once they have driven a further 100km, they would then move to Band 2 and receive 73.21 cent per kilometre and so on.

Automated expenses systems will need to be recalibrated. Less automated systems will need up to 12 different reimbursement rates.

For further information visit http://www.revenue.ie/en/tax/it/leaflets/it51.html. 

Contact Deirdre McDermott - Director OSK Audit for to find out more about our audit and acccounting services. 

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