If you use your car, van, motorcycle or bicycle for business purposes, you should track your miles. Why? Because driving for business or work is a tax deductible expense.
The HM Revenue & Customs (HMRC) allows you to write off business drives and permits you to use whichever reliable method you prefer to maintain your mileage log. This includes a paper mileage log, a spreadsheet on a computer or using a mileage tracking app like MileIQ.
Mileage Allowance Relief
The Mileage Allowance Relief provides tax relief for employees who use their personal car, van, motorcycle, or bicycle for business purposes. To calculate your Mileage Allowance Relief, track your business mileage for the tax year and multiply it by the applicable rate.
The current HMRC approved mileage allowance payment rates for 2023 are shown in the Business Mileage Rates table below.
Please Note: The Mileage rate does not change each year, however the fuel reimbursement rate is updated annually
If your employer doesn’t pay you a mileage allowance, you can claim the full approved amount of Mileage Allowance Relief.
If your employer pays you a mileage allowance, but it is less than the approved amount, you can claim Mileage Allowance Relief on the difference.
If your employer pays you more than the approved amount, you’ll have to pay tax on the difference.
Claiming Mileage Expenses On Your Tax Return
The way you claim mileage expenses on your tax return depends on the amount you’re claiming for. You can claim tax relief on the money you’ve spent on fuel for business trips in your company car.
For claims up to £2,500
Claims for work expenses less than £2,500 for the tax year can be made:
- using a Self Assessment tax return if you’ve previously filled one in
- using the form P87 if you haven’t filled in a tax return
- over the phone if you’ve had a successful claim in a previous year and your expenses are less than £1,000 (or £2,500 for professional fees and subscriptions).
For claims over £2,500:
You must file a Self-Assessment Tax Return if you’re self employed, a company director, have an annual income of at least £100,000 or claim employee expenses over £2,500.