Updated 30 April 2018
If you drive a personal vehicle for business purposes, the business mileage deduction is a great way to save money on your tax bill. But the HMRC won't just take your word for it; they need proof.Here's what the HMRC will want in your mileage log.
The current HMRC mileage rates, called Mileage Allowance Payments or MAPs are:[table id=24 /]
The HMRC won't allow you to estimate your mileage. You also aren't allowed to go back and create your records long after the fact (or if you're facing an audit). Instead, you should track and record your drives as soon as possible. Ideally, you'd be tracking your business drives every day or every week.What should your mileage log include? The HMRC says you must keep a record of the:
For self-employed workers who use simplified expenses, you only need to track your business mileage. You should also monitor your total miles including personal miles, just in case. If you'd prefer the actual expenses method, you should be tracking your business and personal trips.
The HMRC doesn't force you to file records of your business miles every year. But, that doesn't mean you don't need proof. The HMRC says all taxpayers must "keep such records to enable correct and complete returns to be made.” For self-employed workers, it's best to keep these records for at least five years.If the HMRC were to investigate your tax return, they would want to see all your records. If you used your business miles for tax relief, the HMRC would ask for detailed mileage logs to verify your trips.Without accurate, reliable records, the HMRC may disallow your business mileage deduction. Even if you genuinely used your car for business during the year. It's pretty simple: No records, no guarantee you'll get the tax relief you deserve.
The HMRC says you must keep your mileage log (and other tax records) for at least five years after the 31 January submission deadline. The tax agency may check your records years down the road to make sure you're paying the right amount of tax.
The HMRC permits you to use whichever reliable method you prefer to maintain your mileage log. Accepted forms include a paper mileage logbook, a spreadsheet on a computer or using a mileage tracking app like MileIQ.For many years, a paper mileage log was the only method of maintaining this record. People would keep it in their cars and log their drives manually. This works well if you can remember to log every single trip shortly after you've completed it.And there are some who are great at this, but for most of us, this is a major chore. It's extremely tough to remember to log every business drive every single time. You could be running late, or there could be a very good song playing on the radio as you're parking.Along with being difficult to remember, a paper mileage log can easily be lost or damaged. Because the HMRC requires you to keep your records for up to five years, this could be a large-scale pain point if you're ever facing an audit.One major positive of a spreadsheet is that it's difficult to lose (please back up your computer). But it doesn't solve the issue of having to remember to log your business drives every single time. In fact, this often requires you to record your miles twice: once in a notebook or on your phone and then another time when you're in front of your computer.
A mileage tracking app like MileIQ is an ideal solution to track all your business drives. The automatic drive detection means you can track every single business drive, not just the ones you remember to log. Your data is securely stored in the cloud, so you never have to worry about losing your mileage log.MileIQ can also save you time and money. Instead of wasting time logging your miles or recreating trips, it automatically logs them for you. It also captures every single business drive, not just the ones you remember.That's time that you can use to grow your business. Or to play with your kids. Or to watch your favourite footy squad. Let MileIQ handle your miles so you can do whatever you want with your free time.