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Claiming Tax Relief on Mileage

By: J.A.J Aaronson - Updated: 7 Nov 2018 | comments*Discuss
 
Tax Relief Mileage Allowance Payments

A considerable number of professions require employees to travel extensively. In the majority of cases, employers will pay their workers for the mileage that they incur while carrying out their duties. However, some individuals are not aware that there are potentially beneficial tax implications for those who travel as part of their job.

The current tax system allows for what are known as 'mileage allowance payments'. Under this system, per-mile mileage payments made by an employer to an employee are not subject to Income Tax, as long as they are paid at or below the rate set by the government.

In the first instance, it is important to note that only business travel qualifies for these tax-exempt payments; if you also use a Company Car for personal purposes, tax exemptions will not apply to mileage incurred as a result of non-business activities. Even factoring this in, however, the mileage allowance payments system can still represent a significant tax saving.

Statutory Mileage Rates

The government has established 'statutory mileage rates', which determine the acceptable amount that can be paid to an employee per mile of business travel. These rates differ depending on the vehicle used, and the number of miles for which a claim is being made. The following rates apply to 2012/13:
  • For business travel in cars, the first 10,000 miles can be paid at 45 pence per mile, and all subsequent miles at 25 pence per mile.
  • Travel on a motor cycle or bicycle, regardless of the number of miles travelled, can be paid at 24 and 20 pence per mile respectively.

The Inland Revenue form P87 provides an opportunity for employees to list their employment-related expenses for the purpose of tax relief. Information concerning business mileage should be given on this form.

The form requires you to give details of your business travel, including the number of miles travelled using each type of vehicle. You will then be required to calculate the total amount of tax relief to which you are entitled.

Further Relief

Any mileage allowance payments made by your employer are tax free by default. On your P87 form you must, therefore, provide the total sum received in the tax year in such payments. This will then be deducted from your total earnings, along with any other Expenses That Attract Exemptions, to establish your total tax liability for the year.

In many cases, however, employees do not receive as much tax relief as they are entitled to. The total relief available is based not on the mileage allowance payments received from your employer, but on the total number of miles you have travelled. As such, if you have received allowance payments for fewer miles than you have travelled, you will be entitled to further relief.

The Inland Revenue will multiply the number of miles travelled by the relevant statutory mileage rate to calculate your total exemption. From this will be subtracted any mileage allowance payments that you have received. The resulting sum will be your remaining exemption. This can be offset against other employment related earnings.

You may find it useful to download the P87 form from the Inland Revenue website in advance of your annual tax return. Finally, as with any tax matters, your Tax Office will be able to assist you with any queries.

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I work on building sites as an employee but get no mileage allowance or extra money to cover fuel and travel in my own vehicle. Should I be legally entitled to some form of payment or is it completely at my employers discretion? And then also if that is the case are there any other ways I can get tax relief so that I can help counter the costs? Thanks
Mikey - 7-Nov-18 @ 6:00 PM
I am paid a £250 per month travel allowance with my salary, and claim monthly travel expenses each month from the company for any expenses over £150 (e.g, incur £200 travel expenses then I can claim £50. As they only pay 20p per mile, I was expecting to claim tax relief on the additional 25p. However, if I only travel 500 miles on month, the nominal £100 mileage expenses is not paid due to the £150 excess policy. Does this mean I can claim tax relief on the full 45p per mile for those instances where mileage is not paid, or can I only claim for the 25p difference even if I am not reimbursed directly ?
Dom - 13-Sep-18 @ 2:20 PM
Hi- I have a fuel card, the majority of my mileage is work related.can i claim any tax back on this.My company pay for all my fuel.
Littledigidi - 10-Sep-18 @ 11:33 AM
Iv started working for a care company that pays 35p per mile the government website gov.uk says that were supposed to get 45p per mile plus 5p a mile per passenger. im trying to fill in the forms to get tax relief on traveling costs but because our first clients can literally be forty miles away and last client nearly the same from home, a good quarter to nearly half of my mileage is classed as commute its virtually pointless i'm spending more out than im making to cover it iv never claimed mileage before this is the first job iv ever had to do this and its making me rethink my entire career, the p87 form says i need my annual mileage i dont know it because iv only been there three weeks and more packages can come and go so my mileage will change so i cant answer half the questions on it its driving me crazy and im stressing the hell out
bobby87 - 15-Jun-18 @ 1:26 PM
Kath04 - Your Question:
Could someone please give me advice, I have received a tax bill for £2000 as my employer has stated that I have a fuel card to go with my company car, I have worked for the company for 2 years and never been taxed on the fuel card until this tax year. I have only used the car for personal use 132 miles in total for the year and my employer has charged me 10p a mile for using it. I have never been informed that the fuel card was a benefit, is there anything I can do to appeal against this.

Our Response:
If you’re a worker and you’ve tried solving a problem or concern informally by talking to your manager but you’re not satisfied, you can make a formal grievance complaint in writing. Please see link here.
TheTaxGuide - 15-Jun-18 @ 11:07 AM
Could someone please give me advice, I have received a tax bill for £2000 as my employer has stated that I have a fuel card to go with my company car, I have worked for the company for 2 years and never been taxed on the fuel card until this tax year. I have only used the car for personal use 132 miles in total for the year and my employer has charged me 10p a mile for using it. I have never been informed that the fuel card was a benefit, is there anything I can do to appeal against this.
Kath04 - 12-Jun-18 @ 11:27 AM
I did 10,000 business miles in my private car in the 16/17 tax year. I have a company fuel card and I am taxed on it through a p11d. Am I able to claim the 45p on business miles completed?
Phil - 3-May-18 @ 9:43 AM
Please help - Your Question:
I’ve filled in my tax return and all it says I’m due is the 20 percent I’ve paid on 11500 through CIS which is 2300. I was expecting more as I’ve put 4000 business miles down and expenses for tools, work clothing. Should they not be paying me

Our Response:
You would have to contact HMRC directly regarding this matter, please see link here.
TheTaxGuide - 26-Apr-18 @ 2:30 PM
Hi There, I wonder if you can help me? I have recently changed jobs. I had mileage allowance in my previous job, and I claimed over 7,000 miles at 45p from July - February. In my new job, I have the same package; however is there a limit to the amount of mileage I can claim for, or can I claim up to another 10,000 at 45p at this new employer too, or is it the case that the mileage is classed against me, so I can only do 10,000 miles at 45p regardless of the company that pays it?
Roberto - 26-Apr-18 @ 9:11 AM
I’ve filled in my tax return and all it says I’m due is the 20 percent I’ve paid on 11500 through CIS which is 2300. I was expecting more as I’ve put 4000 business miles down and expenses for tools, work clothing. Should they not be paying me
Please help - 24-Apr-18 @ 10:46 PM
Any help on this mileage question would be really appreciated! Also, if I paid no tax one year (without taking into consideration an allowance for the use of my private vehicle) how can I benefit from this - can I carry it over into another year where I did pay tax? Many thanks in advance .....
Hessie - 17-Apr-18 @ 2:21 PM
Hi I am the sole Director of a limited company working from home and do a Self Assessment tax return annually.My tax affairs are very simple!! Income from Dividends and PAYE only. However, I use my personal car for business site visits and meetings but I am not reimbursed for this use / mileage by my Company.Can I claim the cost of these journeys as a personal tax allowance?Some mileage may be paid to my Company by a client as a disbursement on an invoice but many miles are not chargeable.As it’s my car can I claim all mileage as a tax allowance?Any help gratefully received!!
Hessie - 14-Apr-18 @ 6:11 PM
I've claimed mileage relief previous years, and they sent me a cheque, but when I try this year the Gov website claims it's already in my tax code. Is this possible as how would they know what mileage I did last year?
Rich - 14-Apr-18 @ 1:20 PM
Tracy - Your Question:
Could you please tell me where I send my completed P87 for Tax year 6th April 2016 - 5th April 2018Kind Regards

Our Response:
You'll need to send it to HM Revenue and Customs. The address is on the form. Please also see link here .
TheTaxGuide - 10-Apr-18 @ 9:34 AM
Could you please tell me where I send my completed P87 for Tax year 6th April 2016 - 5th April 2018 Kind Regards
Tracy - 9-Apr-18 @ 12:24 PM
On a similar note can someone please advise. Until recently I used my car for business use and was reimbursed at 11p/mile, plus I was also paid a £6k car allowance which was taxed at 40% in the normal manner with my monthly salary. I deduct my private miles via monthly mileage log when making mileage claim thus no benifit in kind applicable. Over the last 3 years I have claimed back the tax relief on the difference between what paid by my employer and the HMRC mileage rates via self assessment, which has been around £2k per year. I have recently changed jobs and again use my car for business miles, with car allowance also paid. The only difference is that my employer will provide a fuel card for business use only again. I have to complete a monthly mileage log with my private miles then deducted from my monthly pay at a nominal rate thus no benefit in kind implications. Given that I am not paying for my fuel directly and reclaiming from my employer as they are providing fuel card, can I still claim the tax relief on the business miles in the normal manner? In effect it is really the same thing. I was simply going to use the cost of the business fuel within the self assessment here, but I have been given conflicting advise on this. Can someone please advise on this. Thanks
David - 21-Mar-18 @ 2:08 PM
Can I claim for part-miles or only complete miles, i.e. so that any fraction of a mile is discounted?
Milometer - 13-Mar-18 @ 4:35 AM
chendre - Your Question:
Hi, I've just started working as a self employed courier driving my own car delivering parcels to customers addresses with online orders. What am I able to claim as regards my fuel, insurance and car expenses?I have also been offered money off fuel. Does this have any tax implications?

Our Response:
You can see all you need to know via the gov.uk link here .
TheTaxGuide - 26-Feb-18 @ 12:05 PM
Hi, I've just started working as a self employed courier driving my own car delivering parcels to customers addresses with online orders. What am I able to claim as regards my fuel, insurance and car expenses? I have also been offered money off fuel. Does this have any tax implications?
chendre - 25-Feb-18 @ 7:51 PM
Pianoman - Your Question:
I am a pensioner who has a part time job as a musician and pay tax as self employed. I drive a round trip of approx 56 miles twice a week to my work. Am I allowed to claim for the mileage against my income tax

Our Response:
Yes, you are allowed to claim for this, if it forms part of the job you are paying tax on.
TheTaxGuide - 12-Feb-18 @ 3:48 PM
I am a pensioner who has a part time job as a musician and pay tax asself employed. I drive a round trip of approx 56 miles twice a week to my work. Am I allowed to claim for the mileage against my income tax
Pianoman - 12-Feb-18 @ 1:33 PM
Pierre - Your Question:
I supply my own car for work and the company supply me with a fuel card Can I claim for excessive wear and tear on my vehicle

Our Response:
As a rule, you are entitled to tax-free reimbursement for costs of travelling that you are obliged to incur in order to do your job; if your employer does not reimburse these expenses, you may be able to claim a deduction from your income and so obtain a tax refund. Normally, an employer would make an allowance for wear and tear - but you would have to speak to your employer directly regarding this.
TheTaxGuide - 3-Nov-17 @ 12:14 PM
I supply my own car for work and the company supply me with a fuel card Can I claim for excessive wear and tear on my vehicle
Pierre - 2-Nov-17 @ 8:02 PM
Hello Can I claim mileage allowance from my old employer for previous years, I was made redundant in April and never submitted all my business miles. Am I still entitled to claim retrospectively?
Paul - 6-Oct-17 @ 10:55 AM
I only realised this year that I'm eligible for tax relief but I am having a problem claiming! I have a company car but my company only pay reimburse me 10p per mile. They have asked for fuel receipts which I don't have- I didn't realise I would need them. Can I get around this some way as I expect I'm due the relief? At least some of it! :(
Reauna - 17-Sep-17 @ 10:15 PM
I claim mileage relief every year. The first time I did this was I was paid a small amount of the total. My tax code was then adjusted to repay the remaining amount to me over a period of years. Each year from then onward's I only get my tax code adjusted and no money. Is this correct or can I ask for the full amount each year?
Deni - 12-Aug-17 @ 11:56 AM
Hi , I am a retired firefighter not yet in receipt of a state pension but am in receipt of occupational pension , I work as and when for a local funeral director but have to travel from home to various church locations and crematoriums to carry out tasks for my job throughout the county. My question is can I claim tax relief for using my own vehicle to travel to and from my different places of work, I travel approx 350 miles per week and do not receive any mileage allowance from my employer. Appreciate any help.
timmo - 7-Jul-17 @ 5:59 PM
Hi I am a company' s director . Can I use my husbands 2nd car for my company ' s usage and claim milage. Or car has to be on my name?
Ashi - 6-May-17 @ 12:09 PM
I'm starting a new job that pays me 28p/ mile travel expenses. Can I get the full amount of 17p back from the government to make it up to the recommended 45p or only 20% as my wages are taxed at this rate? My employers said I could "claim the rest" but 20% back wouldn't cover my costs.
Tab - 14-Feb-16 @ 2:31 AM
Kaysie - Your Question:
My husband has just changed his job. His previous employers have always reimbursed him for his mileage. His new employers however have just told him that he can only claim back a certain amount and the rest will have to be claimed back through HMRC. His business mileage will be approx 45,000 miles per year as he will be covering all of the U.K. Can you please help as we don't know where to begin.

Our Response:
I can only direct you to the gov.uk site here which gives more information on how you can claim.
TheTaxGuide - 7-Oct-15 @ 2:10 PM
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