Mileage Allowance Relief

When your employer calculates the amount of tax to deduct from your wages, they will usually total up your salary and then deduct certain allowable expenses. The final figure becomes your taxable pay – i.e. the amount on which you are required to pay tax on.

So, the lower your taxable pay, the less tax you pay. Mileage Allowance Relief works by reducing your taxable pay based the total number of business miles traveled in the year, multiplied by specific ‘Approved Mileage Rates’ by HMRC. Any amount reimbursed by your employer reduces this relief.

In order to receive Mileage Allowance Relief, you must claim it – it is never given automatically. In a nutshell, if you haven’t claimed the correct allowable expenses, your taxable pay is too high and you would have paid too much tax.

If we have bored you already, head straight to our tax rebate calculator and enter your mileage details to see how much you can claim!

Quite simply, business mileage is any mileage you incur in fulfilling the duties of your job. It does not include travel from your home to your permanent place of work.

For example, a builder may be required to visit different construction sites in his own car, or a healthcare assistant may be required to make home visits as part of their job.

If you are unsure if your journey counts as business mileage, please contact us and we will be happy to advise.

To qualify for a uniform rebate, you must work for or have worked for:

Mileage Allowance Relief can be calculated by multiplying your business mileage by the Approved Rates set out below.

This will give you the amount on which you can claim tax relief amount, not the rebate. You will usually receive 20% – 40% of the final amount back as a rebate depending on the rate of tax you pay.

Example: You travel 5000 miles per year in your own car to visit clients and suppliers. Your employer pays you 25p per mile:

2015/16 5000 x (45p-25p) = £1000
2016/17 5000 x (45p-25p) = £1000
2017/18 5000 x (45p-25p) = £1000
2018/19 5000 x (45p-25p) = £1000

Total Mileage Allowance Relief = £4000
Total tax rebate: £5,000 x 20% = £800

To qualify for a uniform rebate, you must work for or have worked for:

You must claim within 4 years after the end of the tax year. This means you claim relief on all mileage incurred since 6^th April 2015, but not anything prior to that. You can claim even if you are no longer at the same employer.