Mileage Allowance Relief Tax Guide

Mileage allowance relief is given by HMRC to taxpayers who drive their own vehicle for work purposes.

HMRC recognises the costs involved in using your car for work costs and sets approved rates to help cover the expense.

The tax relief is only allowed for journeys to a temporary workplace and not for normal commuting.

You qualify if you’re an employee who travels to temporary workplaces using your own car, van, motorcycle, or bicycle.

The key requirement is that your destination must be a temporary workplace. Typcially somewhere you work for less than 24 months or spend less than 40% of your working time.

HMRC’s approved rates for cars are currently 45p per mile for the first 10,000 business miles in a tax year, then 25p per mile thereafter for cars and vans.

HMRC needs you to follow their specific mileage tax relief rules and expects you to claim back what you are entitled to from them using a P87 form, an online claim form or tax return.

Our mileage allowance relief guide helps you to find out if you can claim a mileage tax rebate, how much you can reclaim and how to claim it back from HMRC.

Can I claim mileage tax relief?

To be eligile to claim back mileage allowance relief from HMRC your claim must meet certain criteria:

1. Firstly it doesn’t matter what your job is if you travel to temporary places of work, you could eligible to claim a tax rebate for your mileage.
2. Secondly you must have paid tax in the tax year or years of your claim.
3. Thirdly it’s important to understand what HMRC class as business mileage to a temporary workplace.

Normal commuting to one permanent place is not classed as travelling to a temporary workplace and is not allowable.

To be eligible for business mileage you generally need to be driving to temporary places of work and spend no more than 24 months at any one place.

What is a temporary workplace for mileage?

HMRC has its own definition of a ‘temporary workplace’ and understanding it is the key to successful mileage claims.

A workplace is usually temporary if you expect to work there for less than 24 months when you first start attending, or if you spend less than 40% of your working time there.

Your regular office is always considered permanent, but client sites, training venues, and project locations typically can qualify as temporary workplaces.

Basically, if you work at more than one location then you may have more allowable mileage than you expected.

In some cases a claim can still be made if the time spent at a temporary place of work exceeds 24 months.

Permanent workplace:

HMRC generally determines a ‘permanent workplace’ as somewhere that you spend at least 40% of your working hours.

You are not entitled to claim tax relief on travel expenses to a place of work HMRC deem to be a permanent workplace.

Read more information about ‘What is a temporary workplace?’

What are the HMRC mileage allowance rates?

The amount you can claim depends on the type of transport you drive.

Government approved mileage allowance relief rates for the 2024/2025 tax year are:

• Car/van: £0.45 per mile up to 10,000 miles (£0.25 over 10,000 miles).
• If you carry a passenger in your car: £0.05 per passenger per business mile.
• Motorcycle: £0.24 per mile.
• Bicycle: £0.20 per mile.

HMRC reference: You can find the most recent mileage allowance rates on .GOV.

How much is a mileage tax rebate worth?

The value of your claim depends on whether you pay income tax at a rate of 20%, 40% or 45%.

A mileage tax rebate example using 10,000 business miles:

• 10,000 miles @ .45p per mile = £4500.
• Mileage £4500 @ 20% tax relief = £900.

In this example if you were paying tax at 20% your claim would be worth in the region of £900.

If you are a higher rate taxpayer paying a rate of 40% you would receive tax relief worth 40% of the value of your mileage claim.

You can use our free mileage tax relief calculator to work out what you may be owed back.

Can I backdate my mileage allowance relief claim?

Yes, you can claim for the previous four complete tax years. This means substantial rebates are possible if you’ve never claimed before.

What records do I need to make a mileage tax rebate claim?

You’ll need an accurate record of your mileage which confirms the locations you have travelled to (including postcodes) with the dates of each journey.

A statement or contract of employment from your employer is also usually needed.

What else you need depends on your circumstances:

If you’re paid a mileage allowance by your employer: pay slips or timesheets showing the number of miles driven is usually enough.

If you’re not paid a mileage allowance by your employer: if you don’t have any records a claim is still possible but you’ll need other information that confirms your job title, job description and temporary work location(s).

Your employer can provide a statement to include all of the necessary information.

How far back can I make a mileage tax rebate claim for?

HMRC allows taxpayers to make claims for the last four tax years but if you don’t claim within that timescale you will typically miss out on what you are owed.

You can make a backdated claim for mileage for more than one tax year at the same time up to a maximum of four years.

Do I need to fill in a tax return to claim mileage?

There are two ways you can claim back your mileage. How you claim depends on the amount you are claiming back.

Mileage claim above £2,500:
Claiming an amount of this size for one tax year needs to be declared on a self assessment tax return, alongside all your other income and any other work related expenses.

If you need to complete a tax return for reasons other than for a mileage claim you will need to include your mileage figure in the employment section of your return.

Mileage claim below £2,500:
Any claims under this sum can submitted independently without a tax return.

The claim must be made accurately, in writing or online and be supported by relevant documentation as evidence as requested by HMRC.

How to claim your mileage tax rebate under £2,500

HMRC require a P87 to be completed for a mileage claim worth under £2500 or an online iForm. You can include mulitple years claims (up to a maximum of four tax years) on the same form.

• If you would like to submit your mileage claim online you can use HMRC’s online iForm which is accessable via .GOV here.
• The P87 employment expenses form is available to complete online so you can download it and post it to HMRC to the address given on the form.

You can get access to the form P87 online through your government gateway which you can set up if you dont already have one.

HMRC expects you to include your mileage records with your claim as supporting evidence.

You can use your personal tax account to check for updates on the status of your claim.

The time it takes the tax office to refund any mileage tax rebate will depend on the timescales they have at the time you make your claim.

How to claim mileage worth £2,500 or more

If you have a mileage claim worth £2,500 or more in any one tax year it should be submitted to HMRC on a self assessment tax return.

You should register for self assessment by completing a form SA1. HMRC will then send you a ten digit UTR number and give you access to the self assessment system so you can submit your tax return online.

If you already complete a tax return (for a different reason) you should include your mileage claim in the employment section of your SA return.

For mileage claims spanning more than one tax year you will need to submit a separate tax return for each year of your claim up to a maximum of four previous tax years.

Tax Tip:

A mileage tax refund can be repaid by HMRC under self assessment and then checked at a later date for accuracy.

It is recommended to have your complete mileage records prepared in case HMRC requests them and to keep them for six tax years.

Do mileage allowance payments from my employer affect my claim?

If you receive a mileage allowance payment (MAP) from your employer this will need to be taken into consideration when calculating your mileage claim.

Some employers pay mileage allowance payments tax free which means what you are paid by your employer needs to be deducted from your claim.

Employer mileage allowance payments that are taxed along with your salary wouldn’t normally need to be deducted from your claim.

Will my tax code change if I make a mileage claim?

HMRC will typically change your tax code after a successful mileage refund claim. Your current tax code will be adjusted to include the same value as the previous tax years mileage claim.

This is done by HMRC so you receive some or all of the relief you are due by paying less income tax as you go along during the tax year.

In reality this may cause issues because your mileage may (in comparison) be different to the previous tax year. This can mean you either won’t pay enough tax or too much.

It’s important to monitor your tax code to ensure that it accurately reflects the mileage you are incurring to avoid a tax bill in the future.

Mileage Allowance Tax Relief Frequently Answered Questions:

What’s the difference between mileage allowance and mileage allowance relief?

This confusion trips up many taxpayers. Mileage allowance is money your employer pays you for business travel.

Mileage allowance relief is the tax rebate you can claim from HMRC when your employer pays you less than the approved rates, or nothing at all.

You can claim relief on the difference between what you received and what the HMRC rates allow.

What are the most common mistakes people make with mileage claims?

The biggest error is claiming for travel to your permanent workplace – your regular office location doesn’t qualify regardless of distance.

Other frequent mistakes include claiming personal mileage, failing to deduct any mileage payments already received from employers, and not keeping adequate records.

Remember, only business travel to temporary locations counts.

Can I claim for driving to my regular office?

No, travel between your home and regular workplace never qualifies for mileage allowance relief, regardless of distance.

Only journeys to temporary work locations, client sites, training venues, or other business destinations beyond your normal commute are eligible.

Is there a minimum amount I need to claim?

No minimum claim amount exists, but remember that smaller claims might not justify the administrative effort.

If you’re making regular business trips, even modest annual mileage can result in worthwhile tax relief, especially when backdated over several years.

What happens if I make an error on my claim?

HMRC understands that mistakes happen. If you discover an error, contact them promptly to correct it.

Deliberate false claims carry penalties, but genuine mistakes are usually resolved without issue. Keep thorough records to support your claim and demonstrate good faith if questions arise.

Will HMRC investigate my mileage claim?

HMRC processes most routine mileage claims without detailed scrutiny, but they may request supporting documentation.

Keeping accurate records and only claiming legitimate business mileage ensures you’re prepared if questions arise. Honest, well-documented claims rarely face challenges.