Tax Relief for Using Your Own Vehicle for Business

If you use your own vehicle for business travel as an employee, you are entitled to receive tax free payments of up to 40p per mile for the first 10,000 miles in the tax year and 25p thereafter.  These rates have been agreed under the HMRC Approved Mileage Allowance Payments (AMAPs) scheme.

In order to qualify, the journeys you undertake must be made in the course of doing your job, for example delivering goods or visiting customers. Any private journeys unrelated to work, including most travel from home to work, cannot be paid tax free.

If your employer reimburses you at a rate less than the tax free amount, you are entitled to claim Mileage Allowance Relief (MAR) on the difference. You will therefore be entitled to claim an additional 20p per mile for the first 10,000 miles you travel for business in the tax year, and a further 5p per mile thereafter. If you pay tax at the higher rate of 40p, this equates to a tax reduction of 8p per mile for the first 10,000 miles and 2p per mile thereafter.  A basic rate tax payer would see reductions per mile of 4p and 1p per mile accordingly.

To claim tax relief, you can include details on the employment pages of your self assessment tax return. If you are not required to fill out a tax return, you can write to HMRC to make a claim, or complete and file a form P87. Your local TaxAssist Accountant can help with its preparation.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.