Mileage logs are used in business to keep a track of distances travelled for work purposes. If your job involves a lot of driving, or if you have a company car, you will usually be asked to keep a detailed mileage log. Most companies pay a certain amount per mile or kilometre to cover fuel and wear and tear on your vehicle. If you are self-employed you will be able to claim deductions against your tax payments. While it will take some time to set up and even more time to be consistent in using it, it is crucial to keep a mileage log.
Keeping Track of Your Travel
Keep track of any travelling you do for work. Examples include:
- travelling to and from client offices for meetings;
- delivering goods and services;
- using your vehicle for voluntary work.
It is important to keep track of miles or kilometres travelled. If you are self employed, you will be able to get tax relief on your travel costs. With rising fuel prices it is particularly useful to know how much you are spending on travel. You can then make informed choices about how you travel and even make alternative arrangements. Travel is not always necessary and you may look into alternative ways to meet or communicate with clients or colleagues, such as Skype or conference calls.
If you work for an employer, they will need to know how much mileage each employee is doing for auditing and tax purposes. Keeping a mileage log enables them to have an overview of employee travel and look at money saving avenues too. You also want to make sure you are being paid for any travel costs you incur as part of your job. It keeps things above board and can stop employees feeling resentful about paying for work related travel costs.
As mentioned above, if you are self employed and using your vehicle for business purposes, you will be able to claim a tax deduction for the costs incurred. The best way to separate your business miles from your personal miles is to keep a mileage log, which can then also be used for tax purposes. If you are employed, your employer will be able to claim tax relief on your travel costs.
Claim Your Money Back
It is important to claim back what you spend on work related travel. Work related travel usually means travel you do in the course of the job, rather than the journey to and from work, unless specifically agreed. Keeping a mileage log means you can be clear about how much fuel you are consuming as part of your job and are remunerated accordingly.
Allegations of fraud do happen. In the event of an allegation of fraud in relation to travel claims, you protect yourself by keeping a record of journeys undertaken for work purposes. Keeping a mileage log is the only way that you can back up your claim and have the payment declared as legitimate.
Essentially, you should record where your journey was to and from, and the miles or kilometres accrued (more details below). Keeping these records will help you to answer any questions about mileage claims, if they arose and show when and where you travelled. The tax office can and will also check that travel claims are not fabricated in the course of their work, so having a detailed record of your journeys on hand will save you any worry. If you are unclear about what constitutes business related travel, it is best to ask your employer (or tax professional) so that you know before you start keeping a mileage log.
Creating A Mileage Log
Decide how you will record your mileage. Make sure that the method you use is accessible, easy to use and remember. You could use a notebook or record the details in a diary. Many smart phones also now offer free and premium applications to record mileage on your cell phone. There are also websites that you can use to track your mileage.
Decide what method will be most useful to you and the way you work and travel and then set up your system. Having a reminder in your car can be useful to remind you to record your journey once you have finished driving.
As a rule, you will usually need to record the following data:
- Odometer (start)
- Odometer (finish)
You can also find templates here to give you an idea of what a mileage log looks like.
What to Do When You Forget to Use the Log
If you forget to record your journey, don’t despair. Some vehicles have interactive mileage calculators that can help you retrieve information on trips you forgot to record. You can also enter the details of the places you travelled to and from on a web based route planner and it will be able to give you the mileage for the journey in question. It is best to try and get in the habit of recording your trips as soon as they happen so you don’t forget to add them to your mileage log.
Keeping an accurate mileage log can seem like a laborious task but the amount of tax deduction or payment that you will get back is a good reason for you to keep doing it. Once you have established a routine that works for you, keeping a mileage record becomes easier.
(Image courtesy of Éole under a Creative Commons Attribution-NonCommercial-ShareAlike 2.0 generic license.)
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