Mileage Claims: A Guide – When it comes to managing business travel expenses, mileage claims often cause confusion. Whether you’re an employee claiming for travel, a business owner tracking costs, or a sole trader, understanding how mileage claims work is essential. Let’s break down the process, explain the rules, and ensure you can claim what you’re entitled to.
Understanding Mileage Claims
First, let’s clarify what mileage claims are. When you use your personal vehicle for business travel, you’re entitled to claim back some of the costs. This isn’t just about petrol; it covers wear and tear, maintenance, and even depreciation of your vehicle. The government recognises that using your personal car for work incurs costs, so they offer a system to reimburse you.
The rates you can claim depend on the type of vehicle you use and the number of miles travelled:
- For cars and vans, you can claim 45p per mile for the first 10,000 miles in a tax year.
- After that, the rate drops to 25p per mile.
- If you’re using a motorcycle, the rate is 24p per mile, regardless of the distance covered.
- For bicycles, the rate is 20p per mile.
It’s important to note that these rates are set by HMRC, and they can change, so it’s wise to check the current rates regularly. If you’re an employer, you can choose to pay more than these rates, but anything above HMRC’s approved rates will be taxable.
Keeping Accurate Records
Accurate record-keeping is crucial when claiming mileage. You can’t just estimate your miles and hope for the best. HMRC requires detailed records of every journey. This means noting the date, the purpose of the journey, the start and end locations, and the total miles driven.
Using a mileage logbook or an app can simplify this process. Many apps allow you to track your journeys automatically, making it easy to compile the necessary information. Keeping receipts for any associated costs, like tolls or parking, can also be helpful, even if they aren’t directly related to the mileage claim.
If you’re ever audited by HMRC, they will scrutinise your records. Missing or inaccurate information could lead to your claim being rejected or even penalties. So, taking the time to maintain detailed records is well worth the effort.
Making a Claim: Mileage Claims: A Guide
When it’s time to make your claim, the process is straightforward. If you’re an employee, you’ll usually submit your mileage claims through your employer’s expenses system. Most companies have a standard form or online system where you input your journey details. Your employer will then reimburse you, either directly through payroll or as part of your expenses.
If you’re self-employed, the process is a bit different. You’ll claim your mileage expenses when you complete your Self-Assessment tax return. You simply total up your business miles for the year and multiply them by the appropriate rate. This figure is then deducted from your taxable profit, reducing the amount of tax you owe.
For company car users, the rules differ slightly. You can’t claim the mileage rates mentioned above. Instead, you’ll use the Advisory Fuel Rates set by HMRC, which reflect the cost of fuel. These rates depend on the engine size of your car and the type of fuel it uses. Remember, these rates change quarterly, so keeping up to date is essential.
Maximising Your Mileage Claim
To make the most of your mileage claim, consider a few strategies. First, plan your journeys efficiently. Combining multiple business trips into one journey can help maximise your mileage while reducing unnecessary travel.
Next, ensure you’re only claiming for legitimate business travel. This doesn’t include commuting to and from your regular workplace, but it does include travel to client meetings, training sessions, or temporary work locations. Keeping your work and personal travel separate in your records can prevent mistakes.
Another tip is to review your vehicle’s efficiency. If you’re regularly using your car for business, choosing a more fuel-efficient model could reduce your costs, even though the mileage rates are fixed. Over time, this can add up to significant savings.
Finally, be aware of any additional allowances you might be entitled to. For example, if you have a passenger in your vehicle who is also travelling for business, you can claim an additional 5p per mile for each passenger. This can be particularly useful for companies where carpooling to meetings or events is common.
Common Mistakes and How to Avoid Them
One of the most common mistakes people make with mileage claims is including non-business travel. As mentioned earlier, commuting doesn’t count. Claiming for these miles can lead to problems with HMRC, including penalties.
Another mistake is failing to update records promptly. Trying to reconstruct your journeys weeks or months later is difficult and often leads to inaccuracies. Make it a habit to log your miles immediately after each trip.
Some people also overlook the importance of maintaining their vehicle properly. Regular maintenance not only ensures your safety but also keeps your vehicle in good working condition, which is vital if you’re relying on it for business travel.
Finally, don’t forget to review the rates regularly. HMRC updates these rates periodically, and using outdated rates could mean you’re not claiming as much as you’re entitled to. Staying informed ensures you’re getting the maximum benefit from your mileage claim.
Final Thoughts
Mileage claims might seem complicated at first, but with the right knowledge and tools, they’re quite manageable. The key is to stay organised, keep detailed records, and make sure you’re following the rules set by HMRC. By doing so, you’ll be able to claim what you’re entitled to without any stress or complications.
Remember, whether you’re an employee, a business owner, or self-employed, mileage claims are there to help you cover the costs of using your personal vehicle for work. Understanding how they work, keeping accurate records, and claiming correctly can save you money and prevent issues down the line. So, take the time to get it right and make sure you’re maximising your claims efficiently.
