If you use your personal car for work-related journeys, you can claim tax back on your mileage using the current HMRC mileage rate. Here’s a look at the mileage rates for 2018 and a rundown of how to use them to calculate your business mileage deduction.
The current HMRC mileage rates are called Approved Mileage Allowance Payments or AMAP
During 2017, HMRC’s AMAP rates were the same as the current ones. In fact, the last time HMRC revised the mileage rates was in 2012.The government doesn’t have any immediate plans to revise the AMAP rates. However, it recently ran a public consultation on the impact of current rules on taxation of employee expenses. And this may lead to future changes in government policy and, in turn, to changes in HMRC’s rules.
HMRC’s AMAP rates cover the costs of running and maintaining your vehicle, including:
HMRC’s AMAP rates don’t cover incidental expenses you’ve incurred on a particular journey, including:
You can only claim these expenses over and above your mileage allowance if you’ve incurred them “wholly and exclusively” for business reasons. In other words, you can only claim these costs back on business journeys.
If you carry passengers with you on work-related travel, your employer can pay you a tax-free passenger allowance in addition to your mileage allowance. At the moment, the allowance is 5p per mile per passenger. Unfortunately, you cannot claim the passenger allowance on your tax return if your employer doesn’t pay it (or pays less than 5p per mile per passenger).
You can claim a mileage deduction using AMAP rates if:
Yes. If your employer pays you less than the AMAP rate, you can claim tax back on the difference. So, if your employer pays 35p per mile and the applicable AMAP rate is 45p per mile, you can claim tax back on the remaining 10p per mile.
HMRC has two tests to help you decide when journeys are business-related and when they aren’t.As a rule, a journey is business-related if:
The following trips don’t count as business journeys:
During 2017 / 18, you racked up 30,000 miles on your private car. You used up 15,000 miles on personal journeys, while the remaining 15,000 were business miles.According to the current AMAP rates, you can claim 45p per mile on the first 10,000 business miles and 25p per mile on anything over this limit.So, to calculate your mileage deduction, you’d multiply your mileage as follows:(10,000 x 45) + (5,000 x 25)This means your total mileage deduction for 2017 / 18 would be £5,750. Since the amount is more than £2,500, you’ll have to complete a self-assessment tax return to claim the deduction.
Yes, keeping a mileage log is super important. You don’t have to submit a mileage log when you claim your mileage deduction. However, HMRC can ask to see your records, and you can get hit with a penalty if they deem your records inaccurate or incomplete.You’ll also have to pay interest on any tax you underpaid.
HMRC doesn’t have any hard and fast rules on what your mileage log should look like. Which means you can keep your records using whichever method you prefer: paper, an online document, a spreadsheet or a mileage tracking app such as MileIQ.That said, your records need to show that “you’ve reported accurately and your end-of-year forms are correct.”Your mileage log should contain at least the following information:
You should keep your mileage log (and any other tax records) for at least five years from the date you submit your self-assessment tax return. The deadline to submit a self-assessment tax return is the 31 October if you submit a paper return and 31 January if you submit it online.
Yes. Applying HMRC’s current mileage rate to your business mileage is the simplest and most straightforward method. Alternatively, you can also claim a mileage deduction using the actual expenses or full cost method. This involves more work, but can sometimes result in a bigger mileage deduction.
You can only use the actual expenses method to claim a mileage deduction if you’ve never claimed using the AMAP rates. You can only switch method if you change your vehicle.
In 2017 / 18, you spent £5,000 on fuel, servicing, car insurance and VED. You also spent £500 on repairs. This means you spent £5,500 in total.Your total mileage for the year was 30,000. 21,000 were business miles, while 9,000 were personal miles. This means your total business usage was 21000/30000 x 100, that is 70 percent.So, you can claim 70 percent of your total costs, that is £3,850.