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Business Mileage Allowance

Business Mileage Allowance – How does it work and what can you claim?

Business owners frequently ask us whether they can claim for all the fuel they use in their personal vehicle because they use it for business purposes. But generally speaking, we tend to advise you to claim a business mileage allowance instead.

In the video below we explain what business mileage allowance is and how to claim it.

How is business mileage allowance 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 and Greater Manchester.  

If you use your own car or van for business purposes you maybe able to claim Mileage Allowance Relief.  

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.  

My colleague travels with me – can I claim any extra?

And did you know, that if a colleague travels with you in your car, you can claim an additional 5p per business mile travelled?

What about Electric vehicles?

Believe it or not, you can still claim 45p per mile if you use an electric vehicle, which added to other areas, makes them an incredibly tax efficient option.

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 – make sure that’s not you 🙂

For more details on expenses you can claim, see HMRC’s guides on the subject:

https://www.gov.uk/expenses-if-youre-self-employed

https://www.gov.uk/expenses-and-benefits-a-to-z

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