It is worth a recap on this subject as the rules can be confusing. Employees and employers alike can get very confused about the rules on what they can claim and what they can’t claim. So let’s review the rules for claiming mileage allowance on business travel for both privately owned and company owned vehicles. This is not an exhaustive review but the important salient points are mentioned below. Further information and advice can be obtained by contacting our Gloucester office. Contact details at the bottom of the article.
Privately owned vehicles
You are able to claim back mileage for your business travel to cover the cost of fuel that you have paid for and where you have used your own vehicle. The thresholds are the maximum allowed regardless of how many cars you use. This allowance is tax free. The HMRC approved rates you can claim are detailed below.
| Mode of Transport | First 10,000 business miles | Over 10,000 business miles |
| Cars & Vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Bicycles | 20p | 20p |
Worth noting that these rates are what almost all employers use. Where an employer/company reimburses at a rate less than that approved rate then you may be entitled to additional tax relief. If the employer/company pays a rate above the approved HMRC rates then you may be subject to additional income tax. If your employer adopts the approved rates (which most do) then you have P11d exemption.
Company Vehicles
The rates detailed below only apply to employees using a company car. These rates are valid from September 2020 and HMRC adjust the rates every 3 months. Check the HMRC website for up to date changes to the advisory rates. Claims cannot be made if the fuel for business travel has already been paid for by the company/employer.
| Engine Size | Petrol | LPG |
| 1400cc or less | 10p | 7p |
| 1401cc to 2000cc | 12p | 8p |
| Over 2000cc | 17p | 12p |
| Engine Size | Diesel |
| 1600cc or less | 8p |
| 1601cc to 2000cc | 10p |
| Over 2000cc | 12p |
Recommendation
In general the recommendation is that you use the HMRC approved rates (unless there is good reason not to). It will pass audit and will avoid any contentious or time consuming follow up with HMRC. We also recommend that for each business trip you keep a record of the date, amount of business miles, to and from location and the business purpose.