UK drivers spend a lot of time on the road. According to the latest government statistics, British vehicles rack up 324 billion miles a year.Luckily, if the drive is for business purposes, you can claim tax back from HMRC. With this in mind, here’s a definitive look at the UK’s business mileage-allowance rates for 2019. We'll also show you how to calculate your mileage deduction.
Here are the latest business mileage rates, or Approved Mileage Allowance Payments (AMAP). You can also claim an extra 5p per mile if you have a passenger with you on a business drive.
The rates apply for any business journeys you make between 6 April 2018 and 5 April 2019. They’re identical to the rates that applied during 2017-18. In fact, the last time AMAP rates changed was in April 2012, when the AMAP rate for the first 10,000 car and van miles rose from 40p per mile to 45p per mile.
You can claim a business mileage allowance using AMAP rates if you:
A journey counts as business travel if:
The following DO NOT count as business journeys:
With that out of the way, let’s take a more in-depth look at AMAP rates.
AMAP rates cover the cost of running and maintaining your vehicle. This includes:
AMAP rates DON’T cover:
You can claim tax back on these expenses in addition to the AMAP rate if you can show you’ve made them ‘wholly and exclusively’ for business purposes. This means:
To calculate your business mileage deduction, you’ll need to keep a log of all your journeys (MileIQ makes this super easy).Once you have this information in hand, calculating your business mileage deduction is very straightforward.Let’s say you’re self-employed. Your total taxable profit (your income after deducting allowable expenses) is £40,000.You’ve travelled 14,000 miles by car. 3,000 were personal journeys and the remaining 11,000 were business-related.So, you’d calculate your mileage deduction as follows:
Now, let’s say you’re an employee. You’ve racked up 10,000 in business mileage on your personal car. Your boss reimburses you at a rate of 35p per mile.In this case, you can claim tax back on the difference, which is 10p per mile.This means you can deduct £1,000 from your taxes (10,000 multiplied by 10p).
Claiming your mileage deduction is easy. If you’re self-employed, include the mileage deduction in your self assessment tax return. If you’re employed, you can claim using Form P87. Do note, however, that you’ll have to file a self assessment tax return if you’re claiming more than £2,500.
HMRC’s business mileage rates don’t apply to company cars. A company car is a vehicle that:
HMRC considers a company car to be a benefit-in-kind. This means you can’t claim a mileage deduction on your tax return. Instead, you actually pay tax on the car.
The amount of tax you pay on your company car depends on:
The company car tax rates (also known as BiK rates) for 2018-19 are:[table id=32 /]
Let’s say your boss gives you a company car with a P11D value of £15,000. It has a petrol engine and emits 75 grams of CO2 per kilometre. You pay tax at the basic rate of 20 percent.To find out the tax due, you’d do the following:
Well, yes you can. While you can’t use AMAP rates, you can claim tax back on the fuel you burn on business journeys using HMRC’s advisory fuel rates.HMRC updates the advisory fuel rates every quarter. However, you can use the old rates for up to a month after they’re updated.The latest advisory fuel rates, which kicked in on 1 December 2018, are:[table id=44 /][table id=45 /]
These are treated the same as vehicles with petrol or diesel engines
4p per mile
To claim tax back on your company car fuel using advisory fuel rates you must:
As with claiming tax back on business mileage using the AMAP rates, claiming tax back on fuel using advisory fuel rates is fairly straightforward.Let’s say you have a Vauxhall Corsa with a 1.4 petrol engine. You rack up 13,000 miles, of which 10,000 are business miles and the rest are personal journeys.Based on the latest fuel advisory rates, you could claim 10,000 miles at 12p per mile, that is £1,200.
Now, let’s say your boss reimburses you for fuel at a rate of 6p per mile. This means you can claim tax back at a rate of 6p per mile, that is £600.
All clear? Great.And don’t forget to keep detailed records of your mileage. You never know when HMRC will ask to see them!