Fuel Tax Rebate

Employees using their personal vehicle for business purposes is a fairly common practice nowadays. However, many people don’t know that they are entitled to a tax rebate for the petrol they use for business purposes. Employees using their personal or company vehicles for work should ensure they are taking full advantage of these benefits and uncover hidden savings.

What is a Fuel Tax Rebate?

Fuel tax rebate is an HMRC initiative to reimburse workers who use their personal vehicles for business purposes. It’s meant to cover not only petrol but also depreciation and wear and tear from the additional mileage. Employees using their own vehicle for business use may be eligible to claim annual tax relief on the petrol with Approved Mileage Allowance Payments (AMAP).

Fuel tax rebate is determined by how many miles you drive, your vehicle type, passengers, and the petrol allowance your employer provides.

company car fuel tank running on empty

Who Can Claim Approved Mileage Claims?

  • UK workers who use their personal vehicles for business are eligible if the reimbursement from their employer is less than what the HMRC provides.

Fuel tax rebates are meant to account for all expenses of a personal vehicle. This includes additional maintenance and insurance fees due to accruing higher mileage. Because of this, employees using a company car are not eligible for AMAP at the same rate. However, they are eligible for a rebate at the Advisory Fuel Rate which is less as it accounts for petrol only. The Advisory Fuel Rate is calculated based on the type of petrol you use and the size of your vehicle’s engine.

Get a Beginners Guide to Fuel Tax Rebate & Fleet Taxes:


How Much Money Can You Get Back with Mileage Claims?

calculator and tax forms for fuel tax rebate

For the 2020/2021 tax year, fuel tax rebate is calculated at:

  • Cars and vans: 45p per mile for the first 10,000 miles and 25p for mileage above that
  •  Motorcycles: 24p per mile
  •  Bicycles: 20p per mile
  • Passengers: 5p per passenger per mile

After calculating your mileage at the above rates, subtract what your employer paid you, and your tax relief is the difference. Claimants receive either 20% or 40% of the mileage rate back, depending on the rate at which you pay tax.

So how does this work in practice? Let’s use an example:

  • A courier who traveled 5,000 miles at 45p per mile = £2250
  • The employer paid 25p per mile or £1250
  •  £2250 – £1250 = £1000
  • £1000 paid at 20% tax relief = £200, or at 40% tax relief = £200

One thing to note is that if the fuel reimbursement your employer gives you isn’t taxed, tax will still be subtracted from your total AMAP. To easily determine how much fuel tax rebate you are eligible for, you can also use an online mileage tax relief calculator.

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When and How Can You Make Mileage Claims & Get Your Fuel Tax Rebate?

You can make mileage claims for petrol expenses as far back as 2015, so if you have been missing out on this initiative, it’s not too late. You also do not need to be working with the same employer to claim your rebate.

refuelling company car to track fuel tax costs

To claim your rebate, request a P87 form and return it to HMRC, or enter your claim amount on your tax return. Claims above £2500 require you to complete a Self Assessment tax return while claims under £2500 do not.

How Can I Track My Mileage for Mileage Claims?

Accurately tracking your mileage is essential to claiming your fuel tax rebate. Both employers and employees are required to keep records that include the date of travel, start and end addresses, reason for the journey, type of car driven, mileage rate offered, and expenses incurred. It’s important that whatever tracking system you use is reliable and defendable, so you can prove your mileage if you are audited.

The simplest, most reliable way to track mileage is with a digital fleet management system like Fleet Geo.

Fleet Geo takes the guesswork out of mileage tracking so claiming your tax relief is a breeze. Installation can be done in minutes without hiring a professional. Fleet Geo tracks your routes with its user-friendly software that is compatible with mobile devices, laptops, and PCs. Your data is easily exported into an Excel sheet for submission to HMRC. Plus, Fleet Geo helps offset high petrol taxes, minimising your expenses even further.

By using your personal car for business use, you save your company tremendous operating costs. Don’t miss out on the opportunity to recuperate some of your expenses!

Fuel tax rebates are an excellent way to offset some of the high costs of owning a vehicle. By tracking mileage using Vimcar’s digital fleet management software, you can accurately and reliably show proof of your business mileage, so you get the tax break you’ve earned.

Mileage claims

What are mileage claims?

Mileage claims are amounts you claim for business travel in your own vehicle if you are self-employed, own a company or work for a company. You can also make mileage claims if you drive a company or pool car on business and pay for fuel (petrol, diesel or electricity). The amount you are claiming is entered into your end-of-year accounts or tax return, reducing the amount you have to pay to HMRC.

When you make mileage claims, you cannot also claim capital allowances for your vehicle or running costs such as insurance and maintenance. Mileage claims cannot be made for personal journeys or for travelling to and from work unless you are asked to work temporarily from a different location.

Who can make mileage claims?

For anyone who is self-employed (as a sole trader or the director of their own limited company), the cost of fuel and keeping a car on the road is an allowable expense. Mileage claims are the way to recoup these costs.

If you drive a company car and your employer does not pay you mileage expenses directly or does not pay the full amount, you can make a mileage claim to HMRC at the end of the tax year.

How much can you claim for mileage?

The current HMRC amount for mileage claims are:

 First 10,000 business milesEach business mile over 10,000
Cars and vans45p25p
Motorcycles24p24p
Bicycles20p20p

If you drive a company vehicle and put fuel in when making business journeys, your employer should reimburse you some or all of the money through MAPs (Mileage Allowance Payments). If they reimburse you less than the above amounts, you can claim the difference through your annual tax return. Employers are allowed to make a certain amount of MAPs each year without having to declare them.

Even better, if you take two or more passengers with you on a business journey, you can claim an extra 5p per mile for each passenger. Qualifying passengers should be employed by or representing the business.

How to make mileage claims

HMRC may make spot checks on mileage claims, so it is vital that you keep an accurate log of your mileage and fuel expenses. Record the date and location of each journey and the business miles covered. You must also keep your fuel receipts. To make a claim on your tax returns or business accounts, add up the mileage and multiply it by the flat rate set by HMRC. Then, if relevant, deduct any payments from your employer.


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