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New changes to travel and subsistence rates for Contractors as of 01 April 2017

The Department of Public Expenditure and Reform have reviewed the current mileage and subsistence expense system in the context of modern business requirements and conditions. These changes are claimable in each of our UmbrellaManaged and 365 Company solutions. 

Mileage Rates

New mileage rates have been outlined that better reflect changes in motoring technology, road conditions, commuter behaviour, and car ownership patterns.

The key changes predominantly incentivise the use of more environmentally friendly vehicles, and include:

  • ā€‹An increase in the number of distance bands from two to four, which attempts to provide a more nuanced compensation regime
  • A lower rate for the first 1,500km 
  • An increased rate from 1,501km to 5,500km 
  • More beneficial compensation rates for cars with lower engine sizes and emissions
  • The formula for calculating mileage now assumes a car is replaced every four years rather than every three years.    

The four bands of proposed motoring expenses are outlined in the below table:  

These new rates will have an impact on Contractors who incur business mileage expenses, depending on the distances that they travel on a regular basis, as well as the type of car that they drive and how efficient it is.

Subsistence Rates:

The Department of Public Expenditure & Reform have also updated the subsistence rates that are claimable in Ireland and overseas.  The following has been outlined:

  • ā€‹The overnight rate has been increased from ā‚¬125.00 to ā‚¬133.73 for absences within the state since 01/04/2017. The daily subsistence rates remain unchanged.
  • The high cost of overnight hotel accommodation in Dublin has also been acknowledged with a new "Vouched Accommodation (VA) Rate" introduced.
  •  This new "VA Rate" reflects the vouched (i.e. receipted) costs of accommodation up to the normal overnight rate (ā‚¬133.73) plus the appropriate day-rate for meals (i.e. the 10 hour rate) to be reimbursed tax free subject to the standard conditions. Full details can be reviewed here. 
  • Payment of the normal overnight rate (ā‚¬133.73) will continue to apply where employees obtain accommodation in Dublin within that rate. 
  • New rates for international accommodation costs have been introduced, dependant on the location. There are further details about this here.   

It is anticipated that Revenue will shortly update IT51, IT54 and Statement of Practice (IT/2/2007) to reflect these changes.

Contracting PLUS will notify you as soon as this update occurs. If you would like to discuss these changes further, please don't hesitate to contact us in 01 611 0707 or email .     

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Tuesday, 25 September 2018