Whether you’re an employer or an employee,  it’s easy to get confused when it comes to claiming car mileage. This guide will cover everything you need to know about the car mileage allowance in the UK; from HMRC’s limit to making a claim.

If you use your car regularly for business purposes, then chances are you know a thing or two about the car mileage allowance.  If not, no problem.Here is a summary for you:The mileage allowance covers the cost of fuel, insurance, road tax, and general wear and tear if you use your personal vehicle to make business journeys.The allowance is basically the maximum amount that a business or individual can claim per mile. This is also known as the ‘approved mileage allowance payment’ (AMAP) and it works by reducing your taxable pay. As long as the AMAP limit is not exceeded, it will not be subject to taxation.

Whether you use your car frequently or occasionally for work purposes, it is worth keeping track of your mileage and understanding what trips qualify to be exempt from taxes, and which do not.

Note: The only-tax-free way to receive reimbursement for business miles is through the approved mileage allowance. Giving an employee a company car or a fixed sum towards petrol will both be taxed, so be aware here.Other travel expenses incurred whilst using your vehicle, such as parking charges and road tolls, will be covered under the subsistence expenditure, rather than the mileage allowance.

With the

HMRC set mileage allowance

, the same rate is applied for every employee, depending on the type of vehicle they use.

Although the HMRC has set the rate for mileage allowance, the rates can differ depending on each company and how much they choose to pay back their colleagues.In the case a company pays back at a lower rate, the employee can apply for a mileage allowance relief from HMRC for the difference at the end of the tax year. For instance, if the employer pays 35p per mile, tax relief can be claimed on the 10p difference per mile.Equally, if a company chooses to reimburse more than the HMRC allowance, the extra will be subject to taxation.It’s a good idea for employers to set clear guidelines and expectations for their employees here before they start using their own vehicles regularly for work.  Establishing a regular system to reimburse employees is recommended.

We now know that if an

employee uses their own car

they are entitled to a car mileage allowance. That’s great, but it’s important each employee understands what they need to do in order to be reimbursed.You’ll need to have evidence for a claim, which means an employee should keep:The best way to do this is through apps that simplify this process and keep a track of all travel expenses.  

Business travel expense management

can be a time-consuming process, making sure that you have clear owners, and timelines will help you stay on top of things.Personal driving miles are never covered and should never be claimed. Businesses are required to keep reliable records of their employees' claims and should pay close attention to the accuracy of the claims to avoid problems with HMRC. Check out our Guide on how to recognize and eliminate expenses fraud for reference.