26 cents a kilometre for using your car for work

The Ministry of Finance and Public Function has approved two orders that update the compensation for mileage expenses for those who use a vehicle to carry out their work, which will reach 0.26 cents per kilometre travelled.

The compensation covers the fuel and the expenses related to the wear and tear caused to the vehicle and its possible breakdowns. Also included in this protection, although proportionally, are insurance and taxes related to the vehicle.

Two things should be noted, this involves those who use their vehicle FOR work, and not for getting to and from their workplace, and to use a vehicle for work will require additional insurance, hence it being included in the claim.

One of the orders published in the Official State Gazette (BOE), contemplates the compensation for public employees who must use their own vehicle to work, while another order includes the exemptions that taxpayers can enjoy in the Tax Personal Income Tax (IRPF) for the locomotion expenses they face in their daily performance using a car or any other vehicle.

Until now, this compensation or exemption had an amount of 0.19 euro per kilometre, an amount established in 2005.

The ways to access the benefit are very different for each group that can enjoy it. In the case of public employees, the 0.26 euro per kilometre will be paid after presenting the corresponding fuel bill and a statement justifying the trip. Subsequently, and after checking the documentation, a deposit will be made in their bank account.

For the group of workers who pay personal income tax who use the vehicle for work, the exemptions will be applied, allowing the amount resulting from multiplying 0.26 euro by the kilometres travelled, to be excluded from the tax return.

For this procedure it will be necessary to have a document that justifies the displacement, and in which the toll and parking costs can be included, as explained by the Department directed by María Jesús Montero.

Fuel price increase

The update to 0.26 cents was pending for various reasons. One of them is that the figure had not been updated since 2005, the year in which the 0.19 euro were established for both the compensation and the exemption in personal income tax. Added to this are other determining factors on the final price of raw materials, such as the Russian invasion of Ukraine, which caused a historic rise in energy prices.

The consequences of the war tension in Ukraine have meant that, currently, the prices of petrol and diesel are almost double what they were in 2005, when the last update was carried out.

You might be interested to know, for the purpose of context, that an MP in the UK can claim 45p per mile, the equivalent of 72p per kilometre, so at the current exchange rate, around 82 cents per kilometre. MPs also get 20p per mile for riding a bike.