HMRC Confirms 45p Per Mile Allowance For Work Travel

Let's Break it down

The approved mileage allowance rates (AMAR) set out by HMRC enable employees to claim relief on travel undertaken for work in their own vehicles. According to official guidelines, these rates compensate for running costs including fuel, repair, and insurance, provided the mileage is not reimbursed by the employer.

The current rate for cars and vans stands at 45p per mile for the first 10,000 miles each tax year, while travel above this threshold is calculated at 25p per mile. Distinct rates apply to motorcycles and bicycles.

Motorcyclists can claim 24p per mile, while cyclists receive 20p per mile throughout the year, with no change after 10,000 miles. This framework aims to maintain fairness in travel cost compensation across vehicle types (Gov.uk).

Eligibility Criteria for Tax Relief

Tax relief is only available for business journeys undertaken in the course of employment, where the employee is responsible for their own vehicle costs. Ordinary commuting to and from a permanent workplace does not qualify, but travel to a temporary location is considered eligible.

Both full-time and part-time employees, as well as directors, may claim if they meet the conditions. Employees may claim for the current tax year and the previous four years, provided they have not already received full reimbursement from their employer.

These guidelines ensure the relief is targeted at those genuinely incurring vehicle expenses for work.

Vehicle Types and Allowance Levels

HMRC’s rates differentiate by vehicle type, meaning allowances are tailored to varying operational costs. For cars and vans, the maximum 45p per mile allows for comprehensive coverage of expenditure up to 10,000 miles. Motorcycles are assigned a lower rate due to decreased running costs.

Bicycles, although not incurring fuel expenses, also attract a per-mile allowance to account for wear, maintenance, and other costs. Employees using company cars cannot claim using the AMAR method, but may be able to claim for fuel and electricity costs on business journeys.

HMRC states: “You can claim tax relief on fuel and electricity costs for business trips in your company car. Keep records to show the actual cost of the fuel.”

Claiming Mileage Allowance Relief

To claim mileage allowance relief, employees must calculate the number of business miles undertaken and ensure records are accurately kept. Where an employer reimburses less than the approved rate, workers are permitted to claim tax relief on the difference.

Conversely, if reimbursement equals or exceeds HMRC’s rates, there is no additional tax benefit. Employees may claim online using HMRC’s self-assessment portal or by post using form P87. Claims should match actual business mileage and not include private or commuting use.

Record-Keeping and Supporting Evidence

Proper record-keeping is mandatory for successful claims. Employees must retain a detailed mileage log that includes the reason for each journey, start and end postcodes, dates, and total miles covered.

For those with multiple jobs, separate logs are required for each employment. These records provide essential supporting evidence if HMRC requests further information or requires verification before processing a claim.

Implications and Guidance for Employees

The mileage allowance framework supports employees with a fair and transparent method to recover costs associated with work travel. It is important for workers to review employer policies, as some organisations provide direct reimbursement, which could affect eligibility.

Tax rules further ensure relief is only applied where appropriate, targeting business travel rather than personal use. HMRC guidance provides ongoing support through its website, helping claimants to check eligibility, submit claims, and maintain required documentation. These measures enhance compliance, reduce errors, and ensure equitable application of relief.