Who Can Claim Business Mileage?

If you use your own vehicle for business purposes, you may be eligible to claim business mileage expenses. This can be a significant tax relief for both employees and self-employed individuals. However, the rules surrounding business mileage can be complex, and it is important to understand who can claim and how to do so correctly.

For employees, business mileage can be claimed when they use their own vehicle for work purposes, such as attending meetings, visiting clients, or traveling between different work locations. Employers can offer Mileage Allowance Payments (MAPs), as outlined by specialist contractor accountants, to reimburse employees for their mileage expenses, and these payments are tax-free up to a certain limit. It is important to note that employees cannot claim business mileage for their regular commute to and from work.

For self-employed individuals, as detailed in our sole trader accounting guide, claiming business mileage is straightforward. If you use your vehicle for business purposes, you can claim a portion of your vehicle expenses as a business expense. This can include fuel, insurance, repairs, and maintenance costs. To claim these expenses, you will need to keep detailed records of your mileage and vehicle expenses, and you may need to provide evidence to support your claims.

Understanding Business Mileage

Defining Business Mileage

Business mileage refers to the number of miles traveled by an employee while carrying out their job duties. This could include driving to a client’s location, attending a business meeting, or traveling between different work sites. It is important to note that business mileage only includes the miles driven for work purposes and not personal use.

As an employer, you have certain tax, National Insurance and reporting obligations if you cover the costs of your employees using their own vehicles for business travel. The cost of travel to a temporary workplace can generally be claimed as business mileage and qualifies for tax relief. A temporary workplace is somewhere other than the ‘regular workplace’, where an employee goes ‘to perform a task of limited duration or for a temporary purpose, even where they attend it regularly’.

Types of Business Travel

There are different types of business travel, as further explained by our small business accountants, that may qualify for business mileage. These include:

• Travel between different work sites
• Travel to meet clients or suppliers
• Travel to attend business meetings or conferences
• Travel to training courses or seminars

It is important to note that commuting to and from work is not considered business travel and cannot be claimed as business mileage. However, if an employee is required to travel to a temporary workplace before going to their regular workplace, this can be claimed as business mileage.

Eligibility Criteria

Employees and self-employed individuals, including those operating through limited companies, are eligible to claim business mileage expenses if they use their personal vehicle for business purposes. This includes driving to and from a temporary workplace, such as a client’s office or a job site. It is important to note that you cannot claim business mileage expenses if you are commuting to and from your regular place of work.

Eligible Employees and Self-Employed Individuals

Employees and self-employed individuals are eligible to claim business mileage expenses if they use their personal vehicle for business purposes. This includes driving to and from a temporary workplace, such as a client’s office or a job site. It is important to note that you cannot claim business mileage expenses if you are commuting to and from your regular place of work.

Qualifying Travel Expenses

In order to claim business mileage expenses, your travel expenses must meet certain criteria. Qualifying travel expenses include fuel, insurance, repairs and maintenance, and vehicle tax. You can also claim a mileage allowance for using your personal vehicle for business purposes. The current mileage allowance rates for employees and self-employed individuals are as follows:

• Cars and vans: 45p per mile for the first 10,000 miles, and 25p per mile thereafter
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

It is important to keep accurate records of your business mileage expenses, including the date, purpose, and distance travelled for each journey. You should also keep receipts and invoices for any expenses you incur, such as fuel and repairs.

Calculating Mileage Claims

If you are an employee who uses your own vehicle for business purposes, you may be eligible to claim mileage allowances. In this section, we will discuss how to calculate mileage claims and the different types of mileage rates that you can use.

Mileage Allowance Payments (MAPs)

Mileage Allowance Payments (MAPs) are payments that you can receive from your employer to cover the costs of using your own vehicle for business purposes. MAPs are tax-free as long as they are within the approved mileage rates, which we will discuss in the next section.

To calculate your MAPs, as facilitated by Xero accountants with integrated tracking features, you need to keep a record of the number of miles that you have driven for business purposes. You can then multiply this number by the relevant MAP rate to calculate your claim. It is important to note that you cannot claim MAPs for any miles that you have already been reimbursed for by your employer.

Approved Mileage Rates

The Approved Mileage Rates are the rates that you can use to calculate your mileage claims. These rates are set by HM Revenue and Customs and are updated every year. The current rates can be found on the GOV.UK website.

The Approved Mileage Rates vary depending on the type of vehicle that you are using and the number of miles that you have driven. For example, the rate per mile for a car or van is currently 45p for the first 10,000 miles and 25p for each mile thereafter. If you are using a motorcycle, the rate per mile is 24p for all business miles.

Advisory Fuel Rates and Electricity Rates

In addition to the Approved Mileage Rates, there are also Advisory Fuel Rates (AFRs) and Advisory Electricity Rates (AERs) that you can use to calculate your mileage claims. AFRs are the rates that you can use to calculate the fuel costs for your vehicle, while AERs are the rates that you can use to calculate the electricity costs for your electric vehicle.

It is important to note that AFRs and AERs are not the same as the Approved Mileage Rates. AFRs and AERs are updated every quarter and can be found on the GOV.UK website. If you use the AFRs or AERs to calculate your mileage claims, you must keep a record of the fuel or electricity costs as well as the number of miles that you have driven.

Tax Considerations for Mileage Claims

When it comes to claiming mileage for business purposes, there are several tax considerations that you need to be aware of. In this section, we will cover the most important tax considerations for mileage claims.

Tax Relief on Business Mileage

If you use your own vehicle for business purposes, you can claim tax relief, a process detailed in our tax returns services. The current rates for claiming tax relief on business mileage are:

• 45p per mile for the first 10,000 miles
• 25p per mile for each additional mile

It’s important to note that you can only claim tax relief on business mileage, not on private mileage. You also need to keep accurate records of your business mileage in order to claim tax relief.

VAT and Mileage Claims

If you’re VAT registered, you can also claim VAT on the fuel element of your mileage claims. The current VAT rate for fuel is 20%. To claim VAT on your mileage claims, you need to keep accurate records of your business mileage, including the date, the purpose of the journey, and the number of miles travelled.

National Insurance Contributions

If you’re an employee and you receive mileage allowances from your employer, you may be liable to pay National Insurance contributions on those allowances. The amount of National Insurance contributions you need to pay depends on the type of mileage allowance you receive.

If you receive a mileage allowance that is less than the approved mileage rates, you won’t need to pay National Insurance contributions on the allowance. However, if you receive a mileage allowance that is higher than the approved mileage rates, you will need to pay National Insurance contributions on the excess amount.

Record Keeping and Reporting

When claiming business mileage, maintaining accurate records of all your journeys is essential. This helps you calculate the correct mileage allowance to claim and also provides evidence for HMRC should they request it.

Maintaining Accurate Mileage Logs

To ensure that you maintain accurate mileage logs, consider leveraging our bookkeeping services designed for this purpose. You should record the following information for each journey:

• The date of the journey
• The start and end locations
• The purpose of the journey
• The number of miles travelled

You can keep track of your mileage using a logbook, spreadsheet, or a dedicated mileage tracking app. It is important to record your mileage as soon as possible after each journey to ensure that you do not forget any details.

Relevant Documentation for HMRC

HMRC may ask you to provide evidence to support your mileage claims, so it is important to keep relevant documentation. This may include:

• Receipts for fuel, repairs, and maintenance
• Parking and toll receipts
• Insurance documents
• Vehicle registration documents

It is also important to keep P11D forms, which show the amount of expenses and benefits you have provided to your employees. These forms must be submitted to HMRC by July 6th each year.

Special Cases and Considerations

Company Cars and Personal Vehicles

If you’re an employee and use a company car for business purposes, you cannot claim mileage expenses. However, if you use your own vehicle for business purposes, you can claim business mileage expenses. This includes self-employed individuals and employees who are required to travel for work, such as salespeople, delivery drivers, and field technicians.

Temporary Workplaces and Regular Commuting

The cost of travel to a temporary workplace can generally be claimed as business mileage and qualifies for tax relief. A temporary workplace is somewhere other than the regular workplace, where an employee goes to perform a task of limited duration or for a temporary purpose, even where they attend it regularly. However, if you are commuting to your regular place of work, you cannot claim business mileage expenses.

Passenger and Carpooling Allowances

If you are a passenger in a carpool, you can claim passenger payments from your employer as part of your business mileage expenses. However, if you are the driver in a carpool, you cannot claim mileage expenses for the journey, but you can claim passenger payments from your employer for each passenger.

It is important to keep detailed records of your business mileage, including the date, time, purpose of the journey, and the number of miles travelled. You can use a mileage logbook or a mileage tracking app to keep track of your business mileage. This will help you to accurately calculate your mileage expenses and ensure that you do not make any incorrect claims.

Claiming Mileage: Practical Steps

If you use your own vehicle for business purposes, you can claim mileage allowance relief. Here are some practical steps to follow when claiming mileage allowance relief.

How to Claim Mileage Allowance Relief

To claim mileage allowance relief, you need to keep a record of all the business journeys you make and the mileage covered. You can use a mileage log or a mileage tracking app to keep track of your business mileage. Make sure you record the date, the starting and ending locations, and the purpose of the journey.

Once you have recorded your business mileage, you can calculate the amount of mileage allowance relief you are entitled to. To claim mileage allowance relief, you need to include the amount you are claiming on your tax return. If you are self-employed, you can claim the relief as a business expense. If you are an employee, you can claim the relief through your employer, with our payroll services facilitating accurate mileage allowance reporting.

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Mileage Allowance Relief Optional Reporting Scheme (MARORS)

If you use your own vehicle for business purposes, you can also use the Mileage Allowance Relief Optional Reporting Scheme (MARORS) to claim mileage allowance relief. MARORS is a scheme that allows you to claim mileage allowance relief without having to keep detailed records of your business journeys.

To use MARORS, you need to keep a record of the total number of business miles you have driven in the tax year. You can then claim a fixed amount of mileage allowance relief based on the total number of business miles you have driven. The current fixed rates are 45p per mile for the first 10,000 business miles and 25p per mile above 10,000 miles for cars and vans. For motorcycles, the rate is 24p per mile.

To claim mileage allowance relief through MARORS, you need to include the amount you are claiming on your tax return. If you are self-employed, you can claim the relief as a business expense. If you are an employee, you can claim the relief through your employer.

Common Questions and Misconceptions

If you’re a business owner, an employee or a self-employed individual, you may be wondering about the rules surrounding business mileage claims. Here are some common questions and misconceptions that you should be aware of:

Business vs Personal Travel

One of the most common misconceptions is that any journey made for work purposes is considered business travel. This is not the case. Business travel is defined as any journey made in the course of employment, which is necessary for the performance of the job. This includes travel to client meetings, job sites, and training sessions. However, ordinary commuting, which is travel between your home and your regular place of work, is not considered business travel.

Fuel Types and Reimbursement Rates

Another common question is how to calculate the reimbursement rate for different fuel types. The reimbursement rate for business mileage claims depends on the type of fuel used. For example, the reimbursement rate for petrol is different from the rate for diesel. The rate for LPG and hybrid cars is also different from the rate for petrol and diesel. It’s important to keep track of your fuel receipts and mileage to ensure that you claim the correct amount.

Changes to Mileage Rates and Regulations

Finally, you may be wondering about changes to mileage rates and regulations. The HMRC sets the mileage rates and allowances for business travel, and these rates can change every year. It’s important to keep up-to-date with the latest rates and regulations to ensure that you are claiming the correct amount. Additionally, there are rules surrounding the VAT threshold for mileage claims, as well as the fuel benefit multiplier and CO2 emissions. Make sure you are aware of these rules and regulations to avoid any potential issues with your business mileage claim.

Additional Resources and Tools

When it comes to tracking your business mileage, there are a number of useful maps and apps that can help you keep accurate records. These tools can make it easier to calculate your mileage allowance payments and ensure that you are claiming the correct amount.

Useful Maps and Apps for Mileage Tracking

One of the most popular apps for tracking mileage is MileIQ. This app uses GPS to automatically track your business miles, making it easy to log your trips and calculate your mileage allowance payments. The app also allows you to categorise trips as either business or personal, making it easy to separate your work-related miles from your personal ones.

Another useful app is QuickBooks Self-Employed. This app not only tracks your mileage, but also helps you manage your finances and invoicing. The app allows you to track your expenses, including your mileage, and automatically categorises them for you. This can save you time and make it easier to keep track of your business expenses.

If you prefer to use a map to track your mileage, Google Maps is a great option. You can use the app to plot your route and calculate the distance travelled, making it easy to calculate your mileage allowance payments. Simply enter your starting and ending points, and the app will do the rest.

HM Revenue and Customs Guidance

When it comes to claiming business mileage, it’s important to follow the guidance provided by HM Revenue and Customs (HMRC). This will help ensure that you are claiming the correct amount and avoid any issues with your taxes.

HMRC provides detailed guidance on their website, including information on mileage allowance payments and how to calculate your claim. They also provide guidance on what counts as a business reason for travel, and what expenses can be claimed.

If you are unsure about any aspect of claiming business mileage, it’s always a good idea to seek advice from an accountant or tax professional. They can help ensure that you are claiming the correct amount and avoid any issues with HMRC.