1st December 2017 | Written by In Accountancy | Categories : Contractors, News
Business mileage and tax relief explained
What is business mileage? How is it worked out and how do we claim tax relief on the miles we travel each year? These are questions we hear week in, week out from local businesses in and around Stockport.
For cars and vans the current approved mileage rate by HMRC is 45p per Business mile. This is up to the first 10,000 business miles and then a reduced rate of 25p per mile thereafter.
For these purposes the tax year (and therefore claims period) runs to 5th April each year.
In many cases an employer will make contributions to employees through their expenses policy for business miles completed on the companies behalf. Often these are made at rates less than those allowed by HMRC. Where this is the case, claims can be made through your self assessment return to uplift the Relief you obtained from your employer to the levels of 45p per mile on the first 10,000 Business miles as noted above.
As ever with HMRC there are strict rules and guidelines around what constitutes business mileage. It is important to keep clear and supportable records of where you went, on which dates and for what purpose. This ensures that relief will be obtained for the business miles completed. If you would like any help with setting up a simple system for minimising the hassle in adhering to HMRC guidelines, please do get in touch and we will be happy to help.
If you have used your own car or van for eligible business travel within recent fiscal years and have been paid less than 45p per mile by your employer you are highly likely to be eligible for a tax refund. There are time constraints for making claims for tax relief and the onus is on the individual to ensure that they obtain the full tax relief to which they are entitled. Needless to say many individuals fail to receive the maximum benefit they are entitled to under HMRC guidelines.
I have used IN Accountancy for both my personal tax and company accounts since their inception in 2012. As they have grown we have not seen any reduction in their top class service – if anything the contrary as they have added services to their offering. Prior to using IN Accountancy our business accounts were performed by one of the big 4. Since moving to IN Accountancy we get a much better quality of advice and service for a fraction of the price. I have recommended Sarah, Andy and the entire team at IN Accountancy to others and will continue to do so.
Dr Adam Rucklidge, Managing Director, Scientific & Medical Products Ltd