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  • Tax relief for business mileage or fuel

Tax relief for business mileage or fuel

You may be able to get tax relief for business mileage when you use your own vehicle on business, or for fuel you buy when you use a company car. You can go back several years to get the relief - the time you've got depends on whether you've previously sent in a Self Assessment tax return.

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What counts as business mileage?

Business mileage is mileage you travel doing your job. It can include travel to a temporary work place but it doesn't include:

  • normal travel between home (or anywhere that is not a workplace) and your permanent workplace
  • private travel

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Tax relief for business mileage in your own vehicle

You may be able to get tax relief for business mileage if you use your own vehicle for work. It can be a car, van, motorcycle or cycle.

You can work out the amount of tax relief – called ‘Mileage Allowance Relief’ - to which you are entitled like this:

1. add up your business miles travelled in the tax year
2. multiply your business miles by the approved mileage rate to work out the approved amount – follow the link below for the latest approved mileage rates
3. add up any mileage allowance payments received from your employer
4. compare any mileage allowance payments received with the approved amount

If the approved amount's more, you're entitled to Mileage Allowance Relief on the difference.

For example, you use your own car for 900 business miles and your employer pays you 30p per mile. The approved amount is £405 (900 times 45p). The allowance you get from your employer is £270 (900 times 30p). Your Mileage Allowance Relief is £135 (£405 less £270). The Mileage Allowance Relief will reduce the amount of income you pay tax on, so your tax bill will reduce by £135 at 20% (if you're a basic rate taxpayer) or at 40% (if you're a higher rate taxpayer) and at 45% (if you're an additional rate taxpayer)

You are only entitled to Mileage Allowance Relief if your employer pays you:

  • no mileage allowance
  • less than the approved amount
    If your employer pays you more than the approved amount, you'll have to pay tax on the extra.

Get details of approved mileage rates

Records you must keep

You need to keep records of dates, mileage and details of all work journeys. Your employer needs this information to make expenses payments to you. You also need them to get any Mileage Allowance Relief.

If you use different vehicles

If you use more than one vehicle of the same kind add all your business miles together in one calculation.

If you use vehicles of different kinds make separate calculations for each one.

Find out how vehicles are grouped

If you work for different employers

If you have two or more employers which are independent of each other, you're due the higher mileage rate for business mileage in each job.

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Tax relief for fuel when using a company vehicle

If you pay for fuel when using a company vehicle for business travel you can get tax relief on fuel costs, less any payments repaid by your employer and covered by a 'dispensation'. You must keep a record of your business mileage to calculate your expenses.

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How to get tax relief for business mileage or fuel

To find out how you can get tax relief for your business mileage or fuel and the time limits for getting it, read the guide 'How to get allowances and reliefs - employees or directors' by following the link below.

How to get allowances and reliefs

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