Pence per Mile
We calculate a running pence per mile, throughout a tax year, recalculated at the end of each period after a successful close off.
To calculate your pence per mile, we divide your total costs through a tax year, by the total miles done in the tax year:
Total business + total private = Total miles
Total employee + Total employer funded costs = Total spend
Total spend / total miles = pence per mile (PPM)
Private Mileage Value
By multiplying all private miles in the tax year by the previously calculated pence per mile, we find the value of all your private miles, as of the most recently closed period. This means all private miles are charged at this new pence per mile.
Pence per mile * private miles = deductions so far
Calculating all private miles against the latest PPM means if you’ve been driving more efficiently, you’ll be charged less for any private miles charged at a higher rate. It also means, at the end of a tax year, you’re not owed any money for the miles you’ve done throughout a year, and you don’t owe your company any money at the end of a tax year.
Current Period Value
To avoid being charged twice for private miles you've already paid for, we subtract all previous deductions in the tax year from this figure, leaving you with the deduction owed for the period.
Deductions so far - previous period deductions = deduction for period.
Employee Funded Costs
Any costs in the period put towards running the vehicle, like fuel paid for out of pocket, will be taken off the period deduction.
Deduction for period - Employee Funded Cost (for period) = Private Fuel Cost for period
Example Calculation:
Below you can find an example of the calculation, using fictional numbers.
spentJohn has done 2000 business miles and 300 private miles in the tax year so far. He has also spent 400 pounds on his fuel card. He has previously paid 30 pounds for his private miles.
Total Business Miles 2000 + Total Private miles 300 = 2300 Total miles
Total Cost £400/ Total miles 2300 (Business and personal) = 0.173913043478261 pence per mile -If you receive a breakdown, you will see it show as 0.17 pence rounded, however in the calculation the full number is used.
0.173913043478261 actual pence per mile X 300 total private miles = £52.17 This is the total deduction due for all the personal miles throughout the tax year so far.
£52.17 - £30 previously paid = £22.17 remaining to be paid in the current month. This would therefore be your next due deduction.