Mileage Allowance Relief Tax Guide

Use your car as part of your job? You could be eligible to claim for mileage allowance relief.

Many people don’t know they can claim mileage tax relief for some, or even all, of their work related journeys.

It doesn’t matter what your job is if you travel to different places of work, you could eligible to claim a mileage tax rebate for your mileage.

HMRC needs you to follow their specific mileage tax relief rules and expects you to claim back what you are entitled to from them using either a P87 form or a self assessment tax return.

Our mileage allowance relief guide helps you to find out if you can claim a mileage tax rebate, how much you can reclaim and how to claim it back from HMRC.

Can I claim mileage tax relief?

It’s important to understand what HMRC class as business mileage to a temporary workplace.

Normal commuting to one permanent place is not classed as travelling to a temporary workplace and is not allowable.

To be eligible for business mileage you generally need to be driving to temporary places of work and spend no more than 24 months at any one place.

Different rules can apply to different situations, which means it’s always best checking if you qualify before trying to claim.

In some cases a claim can still be made if the time spent at a temporary place of work exceeds 24 months.

What is a temporary workplace for mileage?

HMRC has its own definition of a ‘temporary workplace’ and understanding it is the key to successful mileage claims.

Basically, if you work at more than one location then you may have more allowable mileage than you expected.

Temporary workplace:

Essentially, HMRC defines a ‘temporary workplace’ as somewhere you work for no more than 24 months.

There are some other elements to this explanation, but the time spent there is the crucial factor.

You can be eligible to claim tax relief on travel expenses to a workplace deemed temporary by HMRC.

Permanent workplace:

HMRC determines a ‘permanent workplace’ as somewhere that you spend at least 40% of your working hours.

You are not entitled to claim tax relief on travel expenses to a place of work HMRC deem to be a permanent workplace.

Read more information about ‘What is a temporary workplace?’

What are the mileage allowance rates?

The amount you can claim depends on the type of transport you drive.

Government approved mileage allowance relief rates for the 2024/2025 tax year are:

• Car/van: £0.45 per mile up to 10,000 miles (£0.25 over 10,000 miles).
• If you carry a passenger in your car: £0.05 per passenger per business mile.
• Motorcycle: £0.24 per mile.
• Bicycle: £0.20 per mile.

HMRC reference: https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances

How much is a mileage tax rebate worth?

The value of your claim depends on whether you pay income tax at a rate of 20%, 40% or 45%.

A mileage tax rebate example using 10,000 business miles:

• 10,000 miles @ .45p per mile = £4500.
• Mileage £4500 @ 20% tax relief = £900.

In this example if you were paying tax at 20% your claim would be worth in the region of £900.

If you are a higher rate taxpayer paying a rate of 40% you would receive tax relief worth 40% of the value of your mileage claim.

You can use our free mileage tax relief calculator to work out what you may be owed back.

What records do I need to make a mileage tax rebate claim?

You’ll need an accurate record of your mileage. What else you need depends on your circumstances:

If you’re paid a mileage allowance pay slips or timesheets showing the number of miles driven is usually enough.

If you’re not paid a mileage allowance if you don’t have any records a claim is still possible but you’ll need other information like a contract of employment because it should confirm your job title, job description and work location.

How far back can I make a mileage tax rebate claim for?

HMRC allows taxpayers to make claims for the last four tax years but if you don’t claim within that timescale you will typically miss out on what you are owed.

You can make a backdated claim for mileage for more than one tax year at the same time up to a maximum of four years.

Do I need to fill in a tax return to claim mileage?

There are two ways you can claim back your mileage. How you claim depends on the amount you are claiming back.

Mileage claim above £2500:
Claiming an amount of this size for one tax year needs to be declared on a self assessment tax return, alongside all your other income and any other work related expenses.

If you need to complete a tax return for reasons other than for a mileage claim you will need to include your mileage figure in the employment section of your return.

Mileage claim below £2500:
Any claims under this sum can submitted independently without a tax return.

The claim must be made accurately, in writing or online and be supported by relevant documentation as evidence as requested by HMRC.

How to claim your mileage tax rebate under £2500

HMRC require a P87 to be completed for a mileage claim worth under £2500. You can include mulitple years claims (up to a maximum of four tax years) on the same form.

The P87 employment expenses form is available to complete and submit online or to download and post to HMRC to the address given on the form.

You can get access to the form P87 online through your government gateway which you can set up if you dont already have one.

Or you can print a P87 off by downloading it from .GOV.uk if you want to post it instead of sending it to HMRC online.

It’s highly recommended to have all of your mileage records ready to provide HMRC if they ask for them.

You can use your personal tax account to check for updates on the status of your claim.

The time it takes the tax office to refund any mileage tax rebate will depend on the timescales they have at the time you make your claim.

How to claim mileage worth £2500 or more

If you have a claim worth £2500 or more in any one tax year it should be submitted to HMRC on a self assessment tax return.

You should register for self assessment by completing a form SA1. HMRC will then send you a ten digit UTR number and give you access to the self assessment system so you can submit your tax return online.

If you already complete a tax return (for a different reason) you should include your mileage claim in the employment section of your SA return.

For mileage claims spanning more than one tax year you will need to submit a separate tax return for each year of your claim up to a maximum of four previous tax years.

A mileage tax refund can be repaid by HMRC under self assessment and then checked at a later date for accuracy.

It is recommended to have your complete mileage records prepared in case HMRC requests them and to keep them for six tax years.

Do mileage allowance payments from my employer affect my claim?

If you receive a mileage allowance payment (MAP) from your employer this will need to be taken into consideration when calculating your mileage claim.

Some employers pay mileage allowance payments tax free which means what you are paid by your employer needs to be deducted from your claim.

Employer mileage allowance payments that are taxed along with your salary wouldn’t normally need to be deducted from your claim.

Will my tax code change if I make a mileage claim?

HMRC will typically change your tax code after a successful mileage refund claim. Your current tax code will be adjusted to include the same value as the previous tax years mileage claim.

This is done by HMRC so you receive some or all of the relief you are due by paying less income tax as you go along during the tax year.

In reality this may cause issues because your mileage may (in comparison) be different to the previous tax year which will mean you either won’t pay enough tax or too much.

It’s important to monitor your tax code to ensure that it accurately reflects the mileage you are incurring to avoid a tax bill in the future.