petrol/mileage reimbursement - what's the done thing?

[Rebecca41]

My nanny has been with me for 3 months, and since we've had some sunny days she's taken my son out to a couple of parks that are a short drive away.

I'm wondering about petrol reimbursement. Her contract says I'll pay 40p/mile, but fuel prices have gone up since then, and I understand that the going rate is now 45p/mile.

My nanny hasn't mentioned petrol reimbursement at all, but obviously I'll remind her and pay her accordingly.

But should I pay the rate in her contract, or the new higher amount?

You are only obliged to pay the rate in her contract at any point and she can do a tax reclaim on the rest but it's 45p a mile from the 6th(??) April so the trips already done would be at the old rate.

It would be nice to amend your contract to reflect the new higher rate :) and reimburse any trips after the change at the new rate.

Oh, is the rate going up. Didn't know that.

Tax wise, all journeys before the official rise date will need to be at the old rate I expect, otherwise the extra becomes taxable doesn't it?

The rate applies After 6th April 2011 I think. So trips done on or before 6th April would be at 40p per mile.

MrAnchovy - is it After 6th Apr or would a trip done on that day count at the new rate?

Old tax year ends 5th April, new one starts 6th April every year, so new rate applies for journeys made on or after 6th April.

Note that it is the timing of the journey that counts, not when it is paid (ITEPA 2003 S230(1)).