HMRC’s less well known tax rulings…

Business mileage allowances are areas of legislation that are often largely overlooked by taxpayers who may be unaware that there are any laws surrounding the subject, let alone potential tax relief in certain circumstances.

HMRC issues many rules and regulations at the start of each tax year regarding personal taxation. These rules are broad in their scope and much is irrelevant to the average employee, although one of the less common but more significant laws is the rates HMRC publish for business mileage allowances.

HMRC allow a maximum of 45p for business mileage regarding tax purposes. Put simply, if an employee is reimbursed for travel expenses at a rate of 45p or over, they will be entitled to nothing in the way of additional reliefs. However, if an employee is compensated any less than this 45p, they can claim tax relief on the difference between their company rate and the 45p. At a rate of 30p for instance, this would mean they are entitled to relief on 15p; 3p per mile assuming the employee pays basic rate tax at 20%. The figures fluctuate, of course, based on the company policy. The 45p in contrast, remains constant across business until annual mileage reaches 10,000 miles. At this point, the allowance drops to 25p – a figure that is often covered in the initial allowance meaning that any tax relief may be lost by the member of staff from this level of mileage onwards.

Along with this 45p allowance there are certain other considerations employees should make regarding business mileage. For instance – staff can claim an additional 45p on top of their allowance if they carry a passenger, provided the passenger is travelling for business purposes and not any other reason.

Another crucial point is what ‘business mileage’ is defined as. Business mileage is all abnormal miles not travelled in the course of business. Essentially, this means that the daily commute in and out of work is not allowable or travel to a regular work place. However, in most cases trips beyond the normal call of duty such as trips to clients, meetings, conferences, sales pitches etc. are allowed and can be claimed back under business mileage rules.

If you have any queries or require more information about these tax laws, or feel you wish to make a claim for business mileage, websites such as can help guide you through the process, making it quick, easy and secure.

Use our free calculator to find out how much income tax you could be entitled to reclaim.

Calculate Tax Rebate

More helpful articles

The rules for NICs and sample calculation

When it comes to mileage tax claims, there are two separate schemes for consideration: one for tax itself, and the other for NIC, or National Insurance Contributions. Employees who use their own vehicle for working purposes are entitled to payments that are free of both tax and NIC. The rules for each are similar, but […]

Read more
More miles than your average commute?

Travel expenses are a cost which many individuals face over their working lives and day to day, being one of the most significant and widespread people face. Certainly in a business sense, the cost of fuel comes as an expense which is difficult to avoid as there are few or no alternatives. For most employees, […]

Read more