Restrictions on distance

Many tax payers don’t realise that they can actually claim a rebate on mileage incurred while using their own car for business reasons. This could be as much as 45p per mile, but there are restrictions on the distance travelled and the type of vehicle used.

When employees use their own car to travel on business, they generally claim money back for this through their expenses. This is intended to cover them for fuel, as well as a contribution towards their tax, insurance and maintenance. However, the majority of them are not claiming enough, as employers often only pay out half of what they’re eligible for through the tax system.

Are you eligible to make a claim?

Basically, if you’ve used your car to travel for business since April 2013 and didn’t receive the full mileage allowance from your employer, then you should be entitled to a certain amount of tax relief. If you’ve already received some compensation from your employer, then this will be deducted from the amount you’re entitled to. You can claim back for the last tax year, as well as the previous three. The amount you receive will depend on the rate of income tax you pay. This doesn’t cover any mileage you incur as part of your dally commute. However, if you use your own car to travel to a different or temporary work place, a client’s office, then this mileage may be eligible for relief.

Are there any restrictions?

For those employees using a car, the first 10,000 business miles in any tax year are eligible for relief at a rate of up to 45p a mile. Anything over this can be claimed for at 25p a mile. If you used a motorbike, all your mileage is entitled to 24p per mile and for bicycle users it’s 20p a mile. The allowance doesn’t vary for the model of vehicle that you use. Therefore, a high performance car will be entitled to the same rebate as a more economical one.

How do you make a claim?

In order to claim a tax rebate, it’s important that you keep records of the business mileage you do and anything that you’ve already claimed for. If you receive pay slips or complete time sheets, these should state any money your employer paid you back and the number of miles you did in each tax year. You don’t have to use your car for business on a regular basis to be eligible for tax relief. Even if you just do so very infrequently and accumulate different amounts each year, you can still make a claim.

It’s important that more employees are aware of the benefits of making a claim. Most people presume that because they’ve already received some compensation, they’re not entitled to any more. However, having a valid claim could reduce the amount of tax you pay.

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

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