what is business mileage and who can claim it?
One of the most common tax deductions is business mileage. But what exactly is business mileage, and who can claim it?
If you use your personal vehicle for business purposes, you might be eligible to claim business mileage.
As with any topic, it’s always best to consult with an accountant if you can.
Sure, you can read a lot of information online, and it’s a really good starting point, but nothing beats a conversation with a financial professional who has a clear understanding of your business finances and responsibilities.
Joanna Bookkeeping offers flexible accounting and bookkeeping packages that meet the individual needs of business owners. Get in touch with our Oxford-based accounting team today, and discover how we can help with business mileage and so much more!
What is classed as business mileage?
Business mileage is the costs of journeys that are “wholly and exclusively” for business purposes, so incurred while you’re traveling to carry out work-related duties.
Journeys such as your daily commute or any personal trips taken in your vehicle strictly don’t count.
Who can claim business mileage?
You can claim business mileage if you travel for work, and are either:
- a sole trader
- work for a limited company (this includes directors)
If your company is a limited company, it can pay you more or less than the HMRC official rate. If they pay you less than the official rate, you’ll be able to claim it back from HMRC as an allowable expense. But if they pay you more than the official rate, then it will become a taxable benefit and will be recorded on your P11D form and reported to HMRC.
Let’s look at an example…
Kevin runs his own plumbing company, so he drives a lot between clients’ homes and the shops that supply his materials. In this case, Kevin can deduct all of the miles he drives on behalf of his company because they are directly related to earning income from his profession as a plumber and are wholly and exclusively for business. This is just a simplified example. HMRC differentiates between a temporary workplace and a permanent workplace, so each case has to be carefully assessed as there can be elements of it that will change how the journeys should be classified. Please check your case with a professional accountant first before claiming anything. Don’t assume your situation is exactly as Kevin’s.
Most accountants and bookkeepers will encourage you to calculate business mileage by using an app or mileage tracking software, which automatically keeps track of the total number of miles you have driven for business purposes.
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How much can I claim for business mileage?
You should try to use the HMRC-approved mileage allowance payments (AMAP) as this will mean you won’t be taxed on anything above it.
Here are the current HMRC business mileage rates for cars, vans, motorcycles, and bikes:
| First 10,000 miles | Above 10,000 miles | |
|---|---|---|
|
45p (40p before 2011 to 2012) |
25p |
Cars and vans |
|
24p |
24p |
Motorcycles |
|
20p |
20p |
Bikes |
* Figures are correct as of April 2022.
How do I keep track of my business mileage?
You have a couple of options when it comes to tracking business mileage:
Mileage Log – The first option is to keep a manual record of all your business-related driving. To do this, you could use an app, spreadsheet, or accounting software. Whatever method you choose, it’s important to note the date and time of each trip, in addition to your odometer readings at the beginning and end of the day. That way, you can calculate your total miles driven for that day using the HMRC standard mileage rate.
Business Mileage Log Book – The second option is to use a business mileage logbook, you can find these on Amazon or in a stationery/office supply shop, and are small enough to fit in your glove box.
What business records are needed to claim business mileage?
The minimum relevant documentation required for claiming business mileage is:
- Date of travel
- Reason for travel
- Total mileage covered per journey, including a start and end location/address
- Mileage rate offered
Additionally you may be required to keep:
- Car details/type of car, etc
- Additional expenses, e.g., parking
If you’re a new business owner, chances are you’re already looking for ways to save time and money. And keeping track of your business mileage can help you do both.
Our Oxford-based accountants are on hand to help you find the best financial solutions for your business. Plus, because we’re fully digital, we can offer our services to businesses all over the UK!
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