If You Are Required To Use Your Own Vehicle For Work, You May Be Able To Claim Mileage Allowance Rebate From HMRC Based On The Number Of Business Miles You Travel.
What is Mileage Allowance Rebate
Mileage Allowance Relief is a tax refund from the HMRC for deducting the costs of business trips from your income. Essentially, you can reduce the amount of income you are taxed on. Your overall business expenses (including business mileage) can be taken out of your salary and you only pay tax on the amount leftover
In order to receive Mileage Allowance Relief, you must claim it – it is never given automatically.
How does Mileage Allowance Rebate work?
When your employer works out the amount of tax to deduct from your wages, they will usually total up your salary and then deduct certain allowable expenses. The final figure becomes your gross taxable pay – i.e. the amount on which you are required to pay tax on. So, the lower your gross taxable pay, the less tax you pay. Mileage allowance rebate works by reducing your taxable pay based the total number of business miles travelled in the year, multiplied by specific ‘Approved Mileage Rates’ by HMRC. Any amount reimbursed by your employer reduces this relief.
What counts as business mileage?
Business mileage is any mileage you incur in fulfilling the day to day duties of your job. It does not include travel from your home to your permanent place of work. For example, an electrician may be required to visit different construction sites in his own car, or a healthcare worker may be required to make home visits as part of their job. If you are unsure if your journey counts as business mileage, please contact us and we will be happy to advise you.
What if my employer reimburses me?
You may still be able to claim depending on how much your employer pays you per mile. There are specific amounts on which HMRC are prepared to allow tax relief (see below). If your employer pays you less than this, you can claim tax rebate on the difference.
Approved Mileage Rates
First 10,000 Business Miles In The Tax Year
Each Business Mile Over 10,000 In The Tax Year
Cars and vans
How Much can I claim?
Mileage Allowance Relief can be calculated by multiplying your business mileage by the Approved Rates.
This will give you the amount on which you can claim tax relief amount, not the rebate. You will usually receive 20% – 40% of the final amount back as a rebate depending on the rate of tax you pay.
Example: You travel 5000 miles per year in your own car to visit clients and suppliers. Your employer pays you 25p per mile:
2015/16 5000 x (45p-25p) = £1000 2016/17 5000 x (45p-25p) = £1000 2017/18 5000 x (45p-25p) = £1000 2018/19 5000 x (45p-25p) = £1000
Total Mileage Allowance Relief = £4000 Total tax rebate: £4,000 x 20% = £800
Are There Time Limits For Claiming?
You must claim within 4 years after the end of the tax year. This means you claim relief on all mileage incurred since 6th April 2015, but not anything prior to that. You can claim even if you are no longer at the same employer.
How To Claim Mileage Allowance Rebate?
We provide a easy and quick way for claiming your mileage allowance rebate. We only need a few details from you in order for our accountants to review your claim and process the rebate with HMRC. Simply head to our calculator to see if you are eligible and get started with your claim.