Business mileage is an expense for any travel that an employee needs to take in order to perform their work. A business mileage claim is the formal request made to reduce the amount of tax that must be paid at the end of the year due to these business traveling expenses.
What counts as business mileage?
As mentioned above, business mileage refers to any trip in a personal or company-owned vehicle that has a business purpose. In other words, it includes any mileage that you do while working.
Business mileage counts when you travel to:
- A client’s workplace
- An event, such as a seminar or work-related conference
- A location for a mandatory training course
- A temporary work location
Business mileage also counts when the trip has been taken in order to transport or deliver a product or service.
There are a few rules that you should be aware of when it comes to travelling to a temporary work location. One of these is the 24-month rule.
This rule states that you are entitled to claim travelling expenses for trips to a temporary workplace though it further explains that a temporary workplace is considered permanent if your employee spends 40% of their time in this location. In such a situation, business mileage allowance would not apply.
How much can be claimed as business mileage?
HM Revenue and Customs (HMRC) created a simplified scheme called Mileage Allowance Payments (MAPs).
Essentially, you are allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC. This is called an ‘approved mileage allowance payment’ or AMAPs.
The approved mileage rates to the present date are:
| From tax year 2011 to 2012 onwards | First 10,000 business miles in the tax year | Each business mile over 10,000 in the tax year |
|---|---|---|
| Cars and vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Bicycles | 20p | 20p |
The AMAP rates include the running costs of your vehicle, like insurance and maintenance. Please note that these rates can change constantly. We advise you to check Gov.UK for further details and updated information.
How can I claim business mileage?
Claiming for business mileage is a simple process. It’s important to ensure that business mileage claims are accurate and compliant. Whether you claim back as a sole trader, director, or an employee, you should keep the following records:
- Date and location of each business trip, including start and end addresses
- The number of business miles travelled
- Reason for the journey
- The amount claimed
Make sure to archive this data for at least five years to avoid unwanted fines in the future.
As you may notice, keeping track of all of these details could be complex, especially if your company is on the road a lot. However, if you have the right tools it should be a straightforward and easy process.
If you want to know how Webfleet can facilitate your business mileage claim or want to learn more about digital mileage tracking, get in contact with one of our experts today.
Why switch to a digital mileage logbook?
Learn more about how a digital mileage logbook like Webfleet Logbook helps make you tax smart.
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