Car speedo

If you use your own car, motorcycle or bicycle to make journeys for work, then you are probably eligible to claim your mileage back as tax relief.

Unfortunately, this does not include a daily commute between your home and a ‘permanent workplace’. This means a place where you spend 40% or more of your working day for more than 24 months. In the case of jobs like regional managers, this would be extended to include your whole region as one ‘permanent workplace’.

HMRC specifically defines this allowance to be applied to travelling to a ‘temporary workplace’. This means a building or site that you work in for less than 24 months.

  • Approved Mileage Allowance Payments explained
  • HMRC acknowledges your outlay on your vehicle’s running costs with Approved Mileage Allowance Payments (AMAP). These cover fuel, new tyres, insurance, car tax and servicing.
  • For a car, up to the first 10,000 miles, this runs at 45p per mile, with 25p per mile after that figure.
  • If you carry a passenger in your car then you can claim £0.05 for every passenger per business mile. This is only for those who are from the same company on the same business trip.
  • Motorcyclists are entitled to £0.24 per mile
  • Cyclists can claim £0.20 per mile.
These guidelines are set by HMRC and, as long as your payments for business mileage don’t exceed these amounts, you are not required to pay tax or National Insurance against them.

Employers’ Mileage Allowance

There are two types of mileage rate that you might be getting paid by your employer.

  • A mileage allowance that is taxed as part of your overall salary, for this you are likely to be able to claim the full AMAP rate.
  • The other possibility is a mileage rate that is less than the AMAP rates, for this you can claim for the difference between the two amounts.
Evidence for your claim

Ideally, you will have evidence to support your work travel mileage claim, which would hopefully include fuel and other relevant receipts. At the very least you will need a travel log of the dates you travelled and the length of those journeys.

If it is applicable to you, you also need to show records stating how much mileage allowance you have been paid by your employer. This becomes more complex if you use more than one type of vehicle. For example, a motorbike for one trip and a car for another. In this situation, you will need separate records because the AMAP are different for each vehicle.

How to make a claim to HMRC

If you are claiming for mileage that is less than £2500, you need to complete a Form P87 or write a letter and include your relevant records.

If your claim is for more than £2500 in one tax year then you need to fill out a self-assessment tax return. There are sections within this to include your mileage expenses, alongside all of your income for that tax year.

A mileage claim can be backdated for four years and does not require you to have been in continuous employment with one employer. Any refund does directly from HMRC and does not affect your current employer in any way.

You can include other tax reliefs you are entitled to as part of the same claim. For example if your business trip requires you to stay overnight, then you can claim for accommodation, food and refreshments. There are a whole host of work expenses tax reliefs such as:

  • Buying your own tools, equipment and safety kit
  • Using your phone for business calls
  • Membership fees to some Trade Unions and professional bodies.
Many people consider it wise to get professional help when they are submitting their claim, both for accuracy and to ensure that they are claiming their full tax relief entitlement.

By Paul Donohoe, Managing Director of Tax Rebate Services.