Mileage Allowance Relief

Anyone who uses their own vehicle for work is entitled to claim Mileage Allowance Relief from HMRC. This is based on the number of business miles travelled and could amount to 45 pence per mile if you do not receive an allowance from your employer.

What qualifies as business mileage?

Whenever you use your own vehicle to undertake any part of your job, it qualifies as business mileage. This excludes travelling to and from your home and a place of work.

For instance, you may be a painter and decorator who drives to clients’ houses to provide quotations and undertake work or you may be a mobile hairdresser who visits customers in their own homes.

AMG can advise you which part of the mileage you travel in your own vehicle will qualify for Mileage Allowance Relief.

How is Mileage Allowance Relief calculated?

The amount you can claim for Mileage Allowance Relief is calculated by multiplying your business mileage by the Approved Rates set by HMRC, currently 45 pence per mile. This represents the total amount you can claim tax relief on and the level of that tax relief will depend on the rate of tax you normally pay. So, if you are a 20% tax payer then you can claim 20% of the total of your business mileage multiplied by the Approved Rate of 45 pence per mile.

Please note that the Approved Rate of 45 pence per mile is for the first 10,000 business miles and 25 pence thereafter.

For example:

You are a sales rep who travels 10,000 miles a year in your own vehicle visiting potential customers and you are a basic 20% rate tax payer, you could claim:

10,000 x 45 pence         = £4500 total mileage allowance relief

20% of £4500    = £900 total tax relief

If my employer reimburses me for mileage, can I still claim Mileage Allowance Relief?

This all depends how much your employer pays you per mile. If it is less per mile than the HMRC allowance of 45 pence then you will be able to claim tax relief on the difference between whatever your employer pays you and the HMRC allowance of 45 pence

For example:

You are a sales rep who travels 10,000 miles a year in your own vehicle visiting potential customers, you are a basic rate tax payer and your employer pays you 30 pence per mile you could claim:

10,000 x (45 pence minus 30 pence)      = £1500 total mileage allowance relief

20% of £1500                                        = £  300 total tax relief

Why is it important to claim Mileage Allowance Relief?

The amount you pay tax on is based on your salary less any allowable expenses.  It makes sense then that, the more allowable expenses you claim to reduce your salary, means you pay less tax on the final figure represented by your salary less allowances.

Mileage Allowance Relief is one of the ways you can reduce your taxable salary and therefore avoid paying too much tax.  AMG can help you claim the correctly calculated allowance and reduce your tax bill.

Can I claim Mileage Allowance Relief for previous years?

Yes you can claim Mileage Allowance Relief within 4 years of the end of any tax year so, for example, in 2017 you can claim for any business mileage back to 2013.  You may have worked for different employers in that time but you can still submit a claim.

How do I claim Mileage Allowance Relief?

If you can supply AMG with a few details about your employment, business mileage and tax code, our fully qualified accountants will be able to review your individual circumstances and submit a claim on your behalf to HMRC. Don’t forget – Mileage Allowance Relief is never offered automatically, you must claim it yourself.