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Here is the advice our experts gave a subscriber, about Vat on staff travel allowances:
Question:
We pay our staff's vehicle expenses, but we're not sure if the travel allowance is Vat inclusive?
We pay the motor vehicle expenses incurred by our staff, not at a rate per km but the full amount of the vehicle expense. We have, up until now, treated these payments as a travel allowance for PAYE purposes. The question is: Is the travel allowance Vat inclusive, or Vat exclusive?
Answer:
If your staff were paying their own vehicle expense, they be paying Vat on the purchase or rental of the vehicle, toll fees, tyres, repairs, services and insurance. But no Vat on fuel, licence fees or traffic fines. To the extent you want to reimburse the staff, you should pay the allowance including Vat on the Vatable expenses referred to above.
The allowance you show on their IRP5's would be the Vat inclusive amount. They would claim Vat inclusive expenses. If they use the SARS tables, however, then keep in mind that these tables take account of Vat except on fuel, which is zero-rated.
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- What are the Vat implications when leasing equipment?
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