Working out travelling expenses/time help needed

Hi

I am trying to work out what I should pay someone who I send to one of my my customers by way of travelling rates.

So for example I may send someone to a customer for 4 hours on site and the trip takes 2 hours each way.  The rate I pay for the on site bit is sorted but it's the expenses for the travelling part that I am still pondering. 

Is there any commonly used formula for this - eg £0.xx mile plus £x.00 per hour travelling time.  One idea I had was for the hourly rate travelling time to be a percentage of the on site rate.  Or should I be looking at having everything wrapped up in the per mile rate?

Be interested to hear from anyone who has had experience of this.

Cheers

Ken

40p/mile is pretty standard for driving expenses from my sales days.

I would say they probably also deserve at least minimum during the driving time - if not the full "on site" rate since they're effectively doing it under your employ.

Just to clarify this is about paying sub contractors rather than how I charge the client

Ken,

Payment for traveling costs and for time need to be seperate as costs are tax deductible and time is not. The standard inland revenue rate for milage is now 45p per mile (was 40ppm for years). If you pay that against a proper record of the milage then the person you pay it to does not have to pay tax on it becasue it coveres an expense they have incurred. For the travel time you are paying for their labour, just the same as you would be if they were doing something useful, and so any payment is taxible.

Re the payment of travel time my view is that this should be at a lower rate than the rate I am paying him for the actual software development as he is not using those skills whilst driving.  Anyone got any thoughts on this?

That assumes he is not thinking about the software while driving...

I would suggest that you speak to your contractor, his hourly rates should cover all his overheads and cost of sale. If you were employed by a company who you chose to work for and their offices were an hours distance from your home you would not expect to be paid for your travel time or the cost of the journey.

I would suggest that you pay your contractor for onsite time only and 45p per mile travel. Then your client can verify his hours on site and you don't suffer the risk of charges should he be stuck in traffic for two hours.

If you were paying an employee then you would pay flat rate for travel and working, but I would guess the person's salary would be significantly less than you are paying your subcontractor. You would pay travel costs if he\she was using their own car up to a maximum of 45p which is the figure that HMRC accept as reasonable, any more could incur a taxable benefit to the employee.

Hope this helps.

Good point Perry.  I know a very successful PR guy in Honolulu and he charges his clients 'Thinking Time' - he may be in his car or sat in his hottub but he is mulling over their account.

Ken, there are many different ways to approach this and really it's about finding a treatment that is acceptable to you and your subcontractors.  The main thing is to be absolutely clear up front how they will be paid - it is then up to them if they want to work for you on that basis.

One approach could be if you have offices that they would normally attend, then you deduct off their travel time the amount of time their normal commute to your office would be.

Two rates of pay - travelling and working - could be applied but one risk then is people rushing to shorten the travel time then lingering on site to lengthen the work time.

Is it a particular client that you need to make the visits to or are there lots of different ones? I was just thinking that an alternative is to find someone more local to sub for you rather than someone having to drive two hours.  That's potentially achievable if it's one client - or several clients in one part of the country - but not if you have clients all over the place.

Thanks for replies so far - /Michelle using local contractors not really viable as customers could be anywhere and at short notice.

If you sent an employee to do the job you would be paying them at their standard rate while travelling.

It cshould be the same for your sub-contractor, after all, they can't do any other work while travelling on your behalf.

You could keep it simple and arrange a total fee for completion of the job to agreed time and quality standards. Then it's up to the subbie as to how they get there and how long it takes them.

What you charge the client is up to you.

We pay a flat fee of 30p per mile but our assessors do 1000's of miles each year so works out a good rate