When an employee has to use their own car during the course of their normal work duties, there are two ways in which they can be compensated. These are mileage allowance and vehicle reimbursement. They are options that are usually preferred by companies which cannot manage to provide cars for workers who need to drive during work such as salespeople or handymen. In either case, the worker is almost always given discretion to use the money as he or she wishes.

The main difference between the two options is that allowances are usually fixed while reimbursements are not. The former is given as a specific amount at the end of every month without any consideration for the mileage covered or the expenses entered into. A reimbursement is usually calculated depending on the mileage covered in a month. Some companies with car allowance policy allow some limited mileage reimbursement for their employees though.

Reimbursements are calculated on the total distances covered from home or office to a work site. The daily commuting to and from the office will generally be excluded from the scheme. The worker will normally be required to file the mileage information after each excursion. This information is then collated at the end of each month as the payroll is being prepared.

Any vehicle maintenance fees are the owner\’s responsibility and not the company. In addition, they are responsible for procuring the insurance which can significantly be higher when the car is used for business purposes. Whether the employee pays for the gasoline costs normally depends on the employer\’s policy.

For most jurisdictions this form of earning is not tax deductible. There may be certain limitations placed by tax authorities on the amounts that cannot be exceeded if the tax exemption is to hold. This is one reason why workers prefer reimbursements in place of car allowances which are considered taxable income sources.

Some employers apply some constricting measures when they allow their workers to opt for these types of schemes. Some firms will set a threshold daily mileage that will not be covered by the scheme, typically about 20 miles. They may also decline to pay any claims made later than the agreed deadlines for filing the mileages.

In general, companies would rather pay car allowances than allow workers to earn reimbursements. The obvious reason for this is that the latter option brings some form of predictability to the monthly expenses. This provides for better a more standard budget especially where the workers needing to drive during the course of their workday is relatively high. It is also considered that the former scheme is more open to abuse.

Vehicle reimbursement schemes are a popular means for compensating workers who need to travel short distances while working. Employees are attracted to the plans because of these tax exemption options and the flexibility. Employers do not readily accept the schemes because of the element of unpredictability unless they have the option to place restrictive caps on what can be quoted.

CarData offers employee mileage reimbursement and vehicle reimbursement for North American companies.

CarData offers employee mileage reimbursement and vehicle reimbursement for North American companies.
http://www.cardataconsultants.com/

Author Bio: CarData offers employee mileage reimbursement and vehicle reimbursement for North American companies.

Category: Automotive
Keywords: Car, automotive, reimbrusement, vehicle reimbursement program, employee mileage reimbursement,busine