Mileage Allowance: All You Need to Know
Mileage Claims
3 Min Read

Mileage Allowance: All You Need to Know

Organising your mileage claims and understanding the HMRC’s mileage allowance rates might seem like a difficult task. Don’t worry, we’re here to help you understand everything you need to know about claiming mileage allowance.

What is a mileage allowance?

A mileage allowance is what the employer pays an employee to cover the cost of using a personal vehicle for business journeys. To refund employees an appropriate amount, employers use the government mileage allowance rates, better known as Approved Mileage Allowance Payments (or AMAPS), which we will explore in more detail below.

The AMAP rates essentially tell both the employer and the employee what their travel expenses per mile are. Employees can start claiming mileage allowance if they use vans, motorcycles, or personal cars, also known as grey fleet, for business reasons. These rates cover petrol allowance as well as other costs like wear-and-tear.

Our Complete Guide to Mileage Allowance:

  1. What are the current mileage rates for 2019 in the UK?
  2. What if an employer sets a mileage rate different to the HMRC rates?
  3. What is business mileage?
  4. What should my business mileage record include?
  5. How do I use the HMRC mileage allowance rates?
  6. What is the self-employed mileage allowance?
  7. What if I use a company car?
  8. Quick Tip! How can I easily record all of my business miles without any hassle?

Does keeping track of mileage always feel like a hassle?

Learn how Autotrip can make recording business mileage quick and easy.

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1. What are the current mileage rates for 2019 in the UK?

The current AMAP rates are:

Vehicle TypePer Business Mile – under 10,000 milesPer Business Mile – over 10,000 miles
Cars and Vans45p25p
Motorcycles24p24p
Bikes20p20p

Please note: You need to drive the 10,000 miles within the same tax year.

Don’t want to miss out on any important updates? Then fill out the form below to receive every rate change and avoid any financial losses.

What Counts As a Business Journey?

We’ll rip the bandage off quickly: Your daily journey to and from work does not count. What does count however is:

  • Journeys you have to make to carry out your work
  • The journey between two workplaces for the same job
  • If you are a site-based employee with no permanent workplace for less than 24 months
  • Journeys from your home to a client

2. What if an employer sets a mileage rate different to the HMRC rates?

There is no set minimum mileage allowance but if an employer chooses to set a mileage rate that is below the government mileage allowance, then the employee can claim Mileage Allowance Relief. The HMRC accepts there is no tax to be paid by the employee on these mileage expenses if an employer uses a rate the same as or lower than the AMAP rates as their business mileage allowance.

On the other hand, if an employer sets their employee mileage reimbursement higher than the HMRC AMAP rates, then the employer will have to report this to the HMRC using the P11D form.

This is because the employer is paying more than the maximum mileage allowance and will be required to pay the fuel benefit charge for providing their employee with free fuel. The other option is that anything the employer pays over the maximum mileage allowance can be added to the employee’s pay and be taxed the same as the rest of their income.

3. What is business mileage?

It can be hard to know which of your trips you can claim as business mileage expenses. The easiest rule to follow is if the trip was ‘wholly and exclusively’ made for business purposes, then you can make a mileage claim. Sadly your commute to and from your permanent workplace does not count. However, the journeys which you can claim mileage for are:

4. What should my business mileage record include?

It’s important to keep track of all your business mileage so you can present your log to the HMRC when they require it. The key information to record is:

  • The dates and times of the trip
  • Start and end addresses
  • The mileage travelled, which you can easily determine with one of these calculators.
  • Reason for the journey
  • Number of passengers, who must be employed by the same company
  • Amount claimed

5. How do I use the HMRC mileage allowance rates?

You can work out your business mileage allowance with this easy calculation. All you have to do is multiply the miles you’ve covered for business in each year, by the specific rate per mile.

Example One: The total business mileage you have travelled on your motorcycle, in one tax year is 9,000. You can claim 24p per mile for the first 10,000 business miles. So multiply 9,000 x 0.24. Meaning your mileage deduction is £2160.

9,000 miles x £0.24 = £2,160

Example Two: The total business mileage you have travelled in your car, in one tax year is 14,000. You can claim 45p per mile for the first 10,000 business miles and 25p for the rest. Meaning, your mileage deduction is £5,500.

( 10,000 miles x £0.45 ) + (4,000 miles x £0.25) = £5,500

Alternatively, you can use another method to calculate your mileage claims, called Actual Expenses. We’ve covered using this method, rather than using the HMRC AMAP rates, in our claiming mileage as self-employed article. This is a little more complicated because you need to know all the actual costs to run the vehicle, such as:

  • Fuel, oil and tires
  • Insurance and road tax
  • Repairs and registration fees
  • Licenses

Here’s an example of how you would calculate your mileage deduction using this method:

The total mileage you have travelled in one tax year is 11,000 miles. 9,000 of which were business miles, and 2,000 personal.

You spent £3,000 on car repairs, fuel, and servicing.

To find the percentage of your miles which were for business purposes divide 9,000/11,000, which equates to 81%.

This means you can claim 81% of the total yearly costs to run the car as business expenses. So, 81% of the £3,000 in costs is £2,455.

6. What is the self-employed mileage allowance?

Those who are self-employed as a sole trader or a business partnership (not involving a limited company) can use the rates in the table above. Find out how in our guide to claiming mileage as self employed. If you decide not to use these rates, you need to find out about claiming mileage allowance relief on your self Assessment tax return.

7. What if I use a company car?

Mileage rates are not the same to determine company car fuel mileage allowances. Company car mileage rates are different because they only cover fuel. This is because the employer does not need to cover costs such as wear and tear of the vehicle because they are already paying for the car. To find out more about company car mileage rates, check out our recent blog post.

8. Quick Tip! How can I easily record all of my business miles without any hassle?

gps-mileage-tracker

Here at Autotrip, we’ve developed a solution that can help you keep track of your business mileage automatically.

Autotrip’s plug and play GPS tracker captures every drive employees make and our software calculates the mileage and VAT that businesses can claim, saving you time and money.

Learn more about how we make mileage simple at autotrip.com or feel free to send us any questions via live chat.

 

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