What is a mileage claim?

Definition of a mileage claim

A mileage claim is one way to get tax relief on a business journey in your own vehicle, whether that’s a car, motorbike or van.

If you travel on business in your own vehicle, you can add up the miles travelled, multiply them by HMRC’s set rate for that kind of vehicle and then include the result as a cost in your business’s accounts. This will reduce the amount of profit your business will pay tax on.

HMRC’s set rates are:

  • For a car or van: 45p/mile for the first 10,000 miles you travel on business in the tax year and 25p/mile for subsequent miles
  • For a motorbike: 24p/mile

These rates cover the cost of buying, insuring, fueling and maintaining the vehicle so you wouldn’t include any actual vehicle costs in your accounts if you’re making mileage claims, nor can you claim any capital allowances on that vehicle.

Example of a mileage claim:

John is the director of a limited company. He drives 30 miles on business in his own car. This tax year he has already travelled 9,980 business miles so of the 30 miles, 10 will be over the 45p/mile threshold:

9,980 + 30 *= 1,010 miles*

For the 30 miles, he can claim:

(20 x £0.45) + (10 x £0.25) *= £11.50.*

Check out our UK tax rates tracker for the current mileage rates in the UK.

Got questions? Ask Emily!

FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.

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