Use this article to create a stepped mileage rate in Perk. A stepped mileage rate reimburses employees at different rates depending on how many kilometers or miles they've accumulated in the period. Use it when your policy pays a higher rate for the first portion of mileage and a lower rate beyond a threshold.
How stepped mileage rates work
With a stepped mileage rate, you define one or more distance brackets, each with its own rate per km or mile. Perk tracks each employee's accumulated mileage and applies the correct bracket automatically.
Example: Your company reimburses employees at £0.45/km for the first 10,000 km per year, and £0.25/km for any distance beyond that. An employee who has accumulated 9,800 km submits a 500 km trip. Perk reimburses the first 200 km at £0.45/km and the remaining 300 km at £0.25/km.
Each bracket in a stepped mileage rate can have its own tax rate. When tax rates are linked, Perk automatically calculates the tax on each portion of the expense based on the bracket it falls into.
Note: For stepped mileage rates, the tax amount shown at submission and review is an estimate. The final tax calculation is done when the expense is exported, because the definitive reimbursement depends on the employee's total accumulated mileage for the period. The exported amount may differ slightly from the figure shown earlier—this is expected and ensures accuracy.
Creating a stepped mileage rate
Step 1: Add the rate and fill in the basic details
- Go to Settings > Expense settings > Mileage rates.
- Click Add new mileage rate.
- Select Stepped mileage rate.
- Enter all the details for the stepped mileage rate.
Note: Mileage rates cannot be used until they are activated (and assigned to the employee policy, if necessary). Make sure to activate the rate once you have entered all details.
Stepped mileage rate configuration
| Field | Description |
|---|---|
| Name | The name of the mileage rate. |
| Category | The expense category to link this rate to. This makes sure mileage costs are posted to the correct account. |
| Currency | The currency in which the mileage rate is displayed. |
| Valid from (optional) | Set a start date from which the mileage rate is active, if applicable. |
| Valid until (optional) | Set an end date until which the mileage rate is active, if applicable. |
| Applicable countries (optional) | Define the countries in which the mileage rate is valid. |
| Description (optional) | Include a description for the mileage rate, if needed. |
| Priority (optional) | Prioritize the mileage rate by entering a number. A higher number indicates a higher priority. This enables Perk to automatically assign a mileage rate to an expense. |
| Minimum distance for reimbursement (optional) | When entered, the mileage is only calculated if the distance driven per trip is greater than the distance threshold. This means that if the distance driven per mileage trip is lower, nothing is paid out. |
| Attachment required | Turn on this option to force employees upload a supporting document to mileage expenses. |
Step 2: Add the rate brackets
- Under Stepped rate, for the first bracket, enter:
- Starting from: the starting distance for this bracket (usually 0).
- Stepped rate: the reimbursement amount per km or mile for this bracket.
- Tax rate (optional): the tax rate to apply to the portion of the expense that falls within this bracket. When selected, Perk automatically calculates tax for this portion.
- Click Add rate again to add the next distance band.
- Repeat until all your brackets are defined. The last bracket has no upper limit—it applies to all distance beyond the previous threshold.
Example setup for the two-bracket rate above:
| From (km) | Rate (£/km) | Tax rate |
|---|---|---|
| 0 | £0.45 | 20% VAT |
| 10,000 | £0.25 | 20% VAT |
Step 3: Save and activate
Click Save to save the rate as a draft, or Activate to make it available immediately.
Caution: A mileage rate can't be used until it's activated. Make sure to activate it once you've finished entering all the details.
How tax is applied to stepped mileage rates
When you link a tax rate to one or more brackets, Perk automatically applies those tax rates to the portions of each expense that fall within the respective brackets.
Because stepped rate calculations depend on accumulated mileage—which can change as more expenses are submitted within the period—the final tax calculation happens at the time of export to make sure the amounts are accurate.
Example: Alex's company has two brackets: £0.45/km with 20% VAT for the first 10,000 km, and £0.25/km with 20% VAT thereafter. Alex submits a 500 km trip that spans both brackets. Perk shows an estimated tax on the expense form. When the expense is exported, Perk recalculates the tax based on Alex's final accumulated mileage and updates the tax amount accordingly.
Note: If no tax rate is selected for a bracket, the tax field for that portion of the expense will be empty. However, employees can manually add a tax rate if they can see the tax section in the mileage expense form.
Assigning the rate to a policy
A mileage rate only becomes available to employees once it's linked to a policy. To do this:
- Go to Settings > Expense settings > Employee policies.
- Select the policy you want to apply the rate to.
- Under Applicable mileage rates, select the rate you just created.
- Click Save.
To learn more about how Perk calculates stepped mileage reimbursements and applies tax, see How mileage expenses are calculated.