My business is a startup in US; I am UK based with good UK
Mileage allowances v stipend and potential tax issues
Answers
Anon,
Please see my answer on this thread.... https://www.proformative.com/questions/car-travel-allowances#comment-27715
I am sure a lot of folks will chime in with options and recommendations but I think the higher perspective is IMHO, we are twisting ourselves into knots. In your case, why the need for a two tiered system? Why the fixed portion and what are it's effects to the employee and the company?
The bottom questions are....What are you trying to accomplish? and are there simpler ways to do it?
1
Not disagreeing with Emerson, but to your statement of "My sales team have an issue in that the recording of mileage is time consuming..."
I find that statement shows that they are either lazy (there are so many smartphone apps that can tie into a corporate expense report system that are truly inexpensive) or trying to be dishonest.
I have been traveling often. It takes a few minutes for me to enter in expenses (in my application) that my expense reports are the best and simplest to enter into my client's
Regardless of which system you use (see Emerson's comment), don't you want to know what your US Sales team is up to?
Overriding concern is whether this is an "accountable plan" to be deductible for the IRS. If your sales folks refuse to account then it becomes additional taxable income. they will come around..
We have not reviewed ours in a while, but, from recollection, tax rules do not require the "when and where," just odometer readings or maybe just miles per day, and a certification that such miles were for business purpose.
As the IRS rate is 50+ cents per mile, you could do away with the auto allowance (which is taxable income) and just do a reimbursement at the higher IRS rate and, perhaps, make it work better for them.
Their purpose is to sell, a rather vital function, so, making them happy should make everyone happy.
Cheers!