Business Mileage Explained – Tax Advice for Business Owners

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Everything you need to know as a business owner about business mileage and how it can be claimed

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.

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. You can also claim an additional 5p per mile if you take a work colleague with you as a passenger.

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.

Check out our IN-Formed Guide to Expenses for more on what you can and can’t claim as genuine business expenses or contact us directly here.



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