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Common Questions About Tax

Q. What are the mileage allowance rates?

A. Mileage allowance rates are the rates allowed by HMRC for business mileage when using your own vehicle to travel to a temporary workplace in the performance of your duties.

Mileage Tax Allowance Rates

  • Cars and vans up to 5th April 2011 mileage allowance rate:
    40p per mile for the first 10,000 business miles
    25p per mile for all business miles over 10,000 miles
  • Cars and vans from 6th April 2011 mileage allowance rate:
    45p per mile for the first 10,000 business miles
    25p per mile for all business miles over 10,000 miles
  • Motorcycles mileage allowance rate:
    24p per mile for all business miles
  • Bicycles mileage allowance rate:
    20p per mile for all business miles
  • Passenger’s mileage allowance rate:
    5p per passenger per business mile

The passenger allowance can be claimed for carrying business colleagues, who work for the same company, in a car or van where the journey is also a business journey for the passenger. It is possible to claim mileage allowance relief at the above rates on business mileage, providing your employer pays you less than the approved amount.

Business Mileage Example

If you travel 10,000 miles and your employer pays you 20p a mile (£2000) you can claim tax relief on the difference between the approved amount, 10000 miles at 40p (£4000), and the amount your employer has paid you (£2000). As a result your business mileage allowance relief is £2000.

However, if your employer pays your business mileage, and it is taxed, you can claim the maximum mileage allowance rates, which in this example would total £4000.

It is important to use the correct business mileage rates as stated by HMRC when making a business mileage tax rebate claim.

You may also wish to read:

For further information about making business mileage tax claims, please see:

 

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