Individuals can claim from a company HMRC approved mileage rates when using a personal vehicle for business purposes.
When using a personal vehicle for business purposes, the employer would normally reimburse the employee for the cost of the journey using the HMRC Mileage Approved Rates (MAPS) below.
To calculate the value of the expense claim, simply multiply the number of miles by the appropriate rate. For example, a 100 mile journey would be 100 x 45p = £45.00 assuming the cumulative mileage for the tax year was below 10,000.
|First 10,000 miles in year||Additional miles|
|Cars and vans||45p||25p|
When you make an entry into your mileage log, the software keeps track of your miles to date for the tax year and applies the correct rate. When your payslip is created, any mileage that you need to be reimbursed for will automatically be added to your payslip.
When using these rates there will be no additional tax to pay – in the example above an extra £45.00 would be on the pay slip with no extra Income Tax or National Insurance deductions.
You must account for your business mileage throughout the tax year using your own vehicles by grouping the same type together, e.g. all cars or all motorcycles. This means if you change your car part way through the tax year you do not start again with the ‘first 10,000 miles’ for that vehicle.
Sticking to the approved mileage rates
The mileage rates and hence the amount you can receive tax-free is the maximum relief you are entitled to in any tax year. HMRC do not allow you any additional relief if the actual expenses you incur exceed what you receive using these rates.
All the expenses associated with car ownership are taken into account by HMRC including interest payments, business insurance, depreciation and other payments you may have to make on your car. If your company pays you more that the allowances then the excess will be treated as taxable income for yourself and additional tax will become due.
If you carry a fellow employee during business travel you can claim an additional 5p per mile provided the journey is specifically for carrying passengers. You can record this in your mileage log by making an additional entry for the journey and selecting the ‘passenger’ option in the menu.
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