---
title: "Per day and mileage allowances: To be or not to be?"
description: The world of per day and mileage allowances is not without its complexity. It is sometimes hard to make a distinction between what is considered an expense allowance or what type of expense mileage counts as, for instance. Find out below.
image: https://www.captio.com/hubfs/Imatges/per-diem-and-mileage-allowances-to-be-or-not-to-be-1.png
---

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![](https://www.captio.com/hubfs/images/Carol%20Bernard.jpeg)

[Carol Bernard](https://www.captio.com/blog/author/carol-bernard) 2 de May, 2016

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### The [world of per day and mileage allowances](https://landing.captio.net/all-you-need-to-know-about-per-diem-and-mileage-allowances), within the context of company expenses, is not without its complexity. In fact, the concept generates doubts right at its very core. It is sometimes hard to make a distinction between what is considered an expense allowance or what type of expense mileage counts as, for instance. Find out below.

![per-diem-and-mileage-allowances-to-be-or-not-to-be-1.png](https://www.captio.com/hs-fs/hubfs/Imatges/per-diem-and-mileage-allowances-to-be-or-not-to-be-1.png?width=457&name=per-diem-and-mileage-allowances-to-be-or-not-to-be-1.png "per-diem-and-mileage-allowances-to-be-or-not-to-be-1.png")Before we can answer Shakespeare’s eternal question of ‘to be or not to be’ when it comes to per day and mileage allowances, it is important to have a clear understanding of the basis of the two concepts. [Mileage allowance](https://www.captio.com/blog/including-expenses-from-per-diem-and-mileage-allowance-in-the-companys-policy) is one of the company’s travel expenses, which encompass any financial aspect related to the employee’s transport. These can be divided into:

1. **Service costs**: expenses incurred for journeys on public transport, such as train or aeroplane tickets and taxi fares, among others.
2. **Consumption and maintenance costs**: expenses incurred for journeys in a private vehicle, such as fuel, wear and tear and insurance, among others.

Meanwhile, an allowance is an amount of money that the company pays the employee to compensate for the related expenses generated during a business trip. The concept of an expense allowance can be divided into:

1. **Living expenses**: expenses related to the employee’s basic needs in relation to food, etc.
2. **Accommodation**: expense relating to staying at hotels, etc.

However, it is also true that allowances also enable a certain degree of flexibility. In fact, each company adapts its allowances and the concepts that they encompass to their own needs. As such, if an employee wants to find out more about the company’s regulation of allowances and expenses, they have to read the collective bargaining agreement, within the framework of the [travel policy](https://www.captio.com/blog/aspects-included-in-a-company-s-mileage). ![per-diem-and-mileage-allowances-to-be-or-not-to-be-2.png](https://www.captio.com/hs-fs/hubfs/Imatges/per-diem-and-mileage-allowances-to-be-or-not-to-be-2.png?width=433&name=per-diem-and-mileage-allowances-to-be-or-not-to-be-2.png)Meanwhile, to find out the company’s price rate for mileage, they also have to look in the collective bargaining agreement. In the absence of such an agreement, they should read the sector agreement on such matters.

The amounts covered by per day and mileage allowances are subject to modification, either for internal decisions in the  
 company or external causes such as changes in the legislation or taxation rules. Updates are usually applied on an annual basis or every few years, adding the RPI differential and sometimes an additional percentage.

Meanwhile, limitations can generally be found with respect to what does and does not fall within the scope of per day and mileage allowances.

#### Mileage allowance does not cover:

- Traffic fines and parking fees
- Distance travelled for activities not related to business

#### Expense allowances do not cover:

**![Per_diem_and_mileage_allowances_To_be_or_not_to_be.jpg](https://www.captio.com/hs-fs/hubfs/social-suggested-images/Per_diem_and_mileage_allowances_To_be_or_not_to_be.jpg?width=422&name=Per_diem_and_mileage_allowances_To_be_or_not_to_be.jpg)**

- Although it may seem obvious, meals and journeys that are not related to business.
- Meals paid for by a customer or third party. Allowances cannot be accumulated. Use them or lose them. If the employee’s meal has been paid for by somebody else, they are no longer entitled to the living expense allowance that would otherwise have covered this meal.
- Extra expenses above the contracted living expense allowance.
- Personal expenses that are not indispensable for performing professional tasks.

 Therefore, the concept of mileage and per day allowances is flexible, but the company must have a very clear specification of their limits and set them out in its travel expense policy. In addition, good order and supervision is also indispensable in expense management, with a view to preventing conceptual loopholes which allow mismanagement and [fraud](https://www.captio.com/blog/managing-business-travel-expense-fraud).

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#### You may also like…

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[Per day and mileage allowance](https://www.captio.com/blog/topic/per-day-and-mileage-allowance) 27 June, 2016

## [The indispensable facts about mileage allowances](https://www.captio.com/blog/the-indispensable-facts-about-mileage-allowances-with-the-tmo-raquel-gutiérrez)

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[Per day and mileage allowance](https://www.captio.com/blog/topic/per-day-and-mileage-allowance) 6 June, 2016

## [Could your company be the victim of a scam in relation to per day allowances?](https://www.captio.com/blog/could-your-company-be-the-victim-of-a-scam-in-relation-to-per-diem-and-mileage-allowances)

Carol Bernard *timer* 3 min.

[![](https://www.captio.com/hs-fs/file-478017280/blog-files/pvjqsyz8jltbtmeogi8jwvvejd0p-otqhugribmoy32gcfkrn-ld3g5w8t5uc5neflg0x0-jukcrdumwag_u0f7v9s-rh-i5y) ](https://www.captio.com/blog/calculating-the-roi-of-expense-management-tools)

[Per day and mileage allowance](https://www.captio.com/blog/topic/per-day-and-mileage-allowance) 16 January, 2016

## [Calculating the ROI of expense management tools](https://www.captio.com/blog/calculating-the-roi-of-expense-management-tools)

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