If you drive your own vehicle for business purposes — whether because you’re self-employed or part of a company’s grey fleet — you likely qualify to claim back business mileage and apply for tax relief. Claiming tax back on mileage is meant to cover a variety of costs, including fuel, insurance, tax and vehicle maintenance and depreciation.
Determining whether or not you qualify to claim back business mileage can be confusing. This article will go over how to calculate business mileage, what qualifies as business mileage and how to claim tax back on business mileage.
We have also created a business mileage template to streamline the process of claiming back business miles.
What Is Business Mileage?
Business mileage refers to any travel that was completed as part of an employee’s work duties, including travel to a temporary workplace.
In short, it’s any mileage that’s logged while on the job. Business miles cannot be claimed for your regular commute to and from your permanent place of work, nor can they be claimed for any personal journeys undertaken in your vehicle.
If you use cars, vans, motorcycles or bicycles for work, you may be eligible to claim back business miles. Note that this includes anyone who is part of a company grey fleet as well as self-employed persons.
What Counts as Business Mileage?
Any journey completed for work purposes — with the exception of your regular commute — count as business miles. These types of journeys may include: traveling to a client, traveling to a temporary work site and traveling between different temporary work sites.
It’s important that you keep accurate logs of all the miles you’ve driven so that you have evidence to support your business mileage claim at the end of the tax year.
How to Calculate Business Mileage
The simplest way to calculate your business mileage is to track your business journeys on a spreadsheet. Vimcar has created a business mileage calculator to make this process easier. The most important things to note down are the date and location of each journey, and the number of miles covered. You should also save all fuel receipts and any other important documents needed to support your claim.
Do NOT put this record-keeping off until the end of the tax year. It’s best to create a system where you calculate your business mileage at regular intervals (at the end of each calendar month, for example).
Make sure your drivers record their driven mileage so they can claim their business miles later.
Get a Free Mileage Log Template
If you’re worried you’ll forget to maintain a paper log of your business miles, you may benefit from installing a digital car tracker in your vehicle. Car trackers, like Fleet Geo, log the miles of your vehicle, which makes it much easier to review each journey your vehicle has made during a specified period.
You can turn Fleet Geo to private mode when you’re finished with a business journey. This way, the vehicle management systems will only log your business miles and not your personal journeys.
How Is Business Mileage Claimed?
The HMRC has set Mileage Allowance Payments (MAPs) and mileage rates that dictate the amount of money you can claim back from your business miles. The current mileage rates are as follows:
- Cars and vans: 45p per mile for the first 10,000 business miles of the year. 25p per mile for any additional business miles.
- Motorcycles: 24p per mile for the first 10,000 business miles of the year and for any additional business miles thereafter.
- Bicycles: 20p per mile for the first 10,000 business miles of the year and for any additional business miles thereafter.
To figure out how much tax you can claim back on business miles each year, you’ll need to add up the mileage for each vehicle you’ve used for business purposes and then subtract any money your employer has already paid towards your costs.
Read more: how does car allowance work
Ready to Claim Back Business Miles?
Claiming tax back on mileage can be confusing, but as long as you keep thorough records of your business journeys the process should be fairly painless. When it comes to tracking business miles, you have two main options: keep a paper log or invest in a car tracker like Fleet Geo. You’ll also need to save any receipts from your business journeys to support your tax claim.
If you’re interested in tracking your business miles with a digital car tracker, contact Vimcar’s customer service team to learn more about Fleet Geo.