SE31845 - Travel expenses: general - employees using own car for work - statutory basis

Section 198 ICTA 1988

Important note:

From 2002/03 the rules described below have changed. There is a new statutory mileage allowance relief rate that is used to calculate tax relief that employees can get for using their own vehicles for work. Employees are no longer entitled to deduct actual costs (the exact method) or to use the non-statutory authorised mileage rates (the simple method). There is detailed guidance on the new scheme at SE31330 onwards.

2001/02 and earlier

Where an employee uses his or her own vehicle for journeys which count as business travel (see final paragraph of SE31840)

a deduction may be given to cover

• the actual cost of fuel consumed
• the appropriate proportion (based on mileage) of the actual running costs of the vehicle including

See example SE31905 to see how relief is calculated on the statutory basis.

In addition the employee may be able to claim

• capital allowances (see SE36500 onwards)
• relief for loan interest on a car loan (see SE31890).

Remember, from 1996-97 onwards employees can choose to use the simpler method, based on the Inland Revenue`s authorised mileage rates, instead of the statutory basis – see SE31860 onwards.