Claiming mileage relief | Severn Accounting

Employees may pay for the fuel they use for business journeys undertaken in their own car or in a company car. Often, an employer will reimburse this cost by paying a mileage allowance. However, where employees meet part or all of the motoring expenses themselves, they may be entitled to claim tax relief on the shortfall between what they’ve actually spent and what they’ve been reimbursed. Understanding mileage relief is crucial for employees who regularly use their own vehicles for work purposes, as it can result in meaningful tax savings at the end of the financial year.

What is mileage relief?

Mileage relief is a tax relief available to employees who use their own vehicles for business journeys and don’t receive a full reimbursement from their employer for the actual costs incurred. Rather than claiming relief based on actual expenses (which can be complex and require detailed records), HMRC allows employees to claim a fixed amount per mile under the approved mileage allowance relief scheme. This simplified approach makes it far easier to calculate and evidence your claim at self-assessment.

It’s important to note that this relief applies only to genuine business mileage—commuting between your home and regular workplace doesn’t count. However, travel from one business location to another, client visits, and journeys to temporary workplaces do qualify.

Current mileage rates for 2024/25

HMRC’s approved mileage allowance relief rates are:

Cars and vans: 45p per mile for the first 10,000 miles in the tax year, then 25p per mile thereafter
Motorcycles: 24p per mile
Bicycles: 20p per mile

These rates have remained unchanged for several years, which means they’ve lost some purchasing power in real terms. Nevertheless, they represent the amount you can claim as relief if your employer reimburses you at a lower rate.

For example, if you drive 12,000 miles for business purposes and your employer reimburses you at 30p per mile, you’d receive £3,600 from your employer. Your total entitlement under HMRC rates would be (10,000 × 45p) + (2,000 × 25p) = £4,500. You could therefore claim tax relief on the £900 shortfall.

Keeping proper records

To claim mileage relief at self-assessment, you’ll need to maintain accurate records throughout the tax year. HMRC doesn’t require you to submit detailed logs with your return, but they may request evidence if selected for enquiry. Keep the following:

Mileage log: Record the date, journey purpose, start and end points, and miles travelled
Odometer readings: Note readings at the beginning and end of the tax year
Employer reimbursement records: Payslips or expense claim confirmations showing amounts received

Many employees use simple spreadsheets or mobile apps to track mileage, which makes it straightforward to calculate annual totals. The key is consistency and contemporaneous recording—notes made after the event are less compelling evidence.

Claiming relief at self-assessment

When you complete your self-assessment tax return, you’ll enter your mileage claim in the employment pages. The calculation is simply:

(Total qualifying miles × applicable rate) − reimbursement received = relief claimable

This figure is then set against your employment income, reducing your overall tax liability. If you’re a basic rate taxpayer, relief at 20% on £900 would save you £180 in tax. Higher rate taxpayers benefit proportionally more—relief at 40% on the same amount saves £360.

It’s worth noting that if your employer reimburses you at or above the approved rates, you won’t have a claim. Conversely, if your employer pays nothing toward fuel costs, you can claim the full approved amount.

One final consideration

From April 2024, the statutory mileage allowance relief was extended to cover electric vehicles (EVs) at the same rates as petrol and diesel cars. If you’ve switched to an EV for business purposes, you can claim the full 45p per mile (for the first 10,000 miles) without any reduction.

Mileage relief is a valuable but often overlooked tax benefit. Many employees simply accept their employer’s reimbursement without realising they may be entitled to additional relief. Taking time to track your business mileage properly throughout the year ensures you capture every penny of relief due to you.

For tailored advice, contact Severn Accounting — we’re here to help.