Understanding Mileage Allowance Relief (MAR) and HMRC Rates
Why Mileage Relief Matters
Driving for work can rack up costs quickly, from fuel to maintenance. If you're an employee or self-employed in the UK, you may be entitled to claim back these expenses through Mileage Allowance Relief (MAR) from HMRC. It's not just about cutting costs—it’s about ensuring you're not paying more tax than you should.
HMRC Mileage Rates Explained
For the 2024-2025 tax year, HMRC allows specific rates for mileage claims, known as Approved Mileage Allowance Payments (AMAP). Here’s a breakdown:
Vehicle Type | First 10,000 Miles (per mile) | Above 10,000 Miles (per mile) |
Cars and vans | £0.45 | £0.25 |
Motorcycles | £0.24 | £0.24 |
Bicycles | £0.20 | £0.20 |
These rates cover costs like fuel, wear and tear, insurance, and repairs, so you can't claim additional expenses for these.
Who Can Claim Mileage Allowance?
You’re eligible to claim if:
You’re an employee using your vehicle for work purposes (excluding commuting).
You’re self-employed and need to travel for business tasks (e.g., visiting clients or suppliers).
However, it’s essential to distinguish between allowable and non-allowable journeys. For example:
Allowable: Driving to client meetings, work-related training, or temporary job sites.
Non-Allowable: Commuting from home to a permanent workplace.
The Tax Relief Mechanism
Mileage claims work by comparing the amount reimbursed by your employer (if any) to HMRC’s AMAP rates:
If your employer pays less than AMAP rates, you can claim the difference as tax relief.
If you’re self-employed, you’ll include mileage costs in your self-assessment as business expenses.
Example Scenario
Imagine you're an employee driving 12,000 miles for work annually. If your employer reimburses £0.30 per mile:
HMRC allows £0.45 per mile for the first 10,000 miles and £0.25 thereafter.
Total relief: [(10,000 x £0.15) + (2,000 x £0.25)] = £2,000 x £0.15 + £500 = £2,500.
This difference reduces your taxable income, lowering your tax bill.
Keeping Accurate Records
To claim MAR, detailed records are crucial. HMRC may require:
Dates and purposes of trips.
Total mileage and destinations.
Receipts (if relevant) for additional costs.
Consider using mileage-tracking apps or keeping a detailed logbook.
Claiming Process for Employees and Self-Employed
Navigating the Claiming Process for Employees
If you're employed and use your personal vehicle for work purposes, claiming Mileage Allowance Relief (MAR) through HMRC can help offset your travel costs. Let’s dive into the step-by-step process tailored specifically for employees.
1. Check Your Eligibility
Before filing a claim, confirm that your travel qualifies:
You must have used your vehicle for work-related tasks.
The travel must not include commuting to a permanent workplace.
Your employer either didn’t reimburse mileage or reimbursed below HMRC's AMAP rates.
If your employer reimburses mileage in full at HMRC’s rates, you’re not eligible for additional relief.
2. Calculate Your Mileage Relief
For employees, the formula is simple:
Approved Mileage (HMRC rate) - Employer Reimbursement = Relief Claimable
Let’s take an example:
You drove 8,000 business miles in a tax year.
HMRC allows £0.45 per mile, but your employer only reimbursed £0.30.
Relief: 8,000 miles x (£0.45 - £0.30) = £1,200.
3. Filing Your Claim Online or by Paper
Employees can claim MAR in two main ways:
Online via the HMRC portal: This is the fastest and most efficient option. Log in to your personal tax account, navigate to the "Tax relief for expenses of employment" section, and provide details of your mileage.
Using a P87 Form: If you're claiming for a single tax year and the total expenses are under £2,500, you can submit a P87 form, either online or by post. Ensure you have the following information:
Employer details (name, PAYE reference).
Business mileage breakdown.
Amount reimbursed by your employer (if any).
4. What Happens Next?
HMRC reviews your claim and adjusts your tax code if necessary, allowing relief for future claims. If you’ve overpaid tax, HMRC will issue a refund directly to your bank account.
Pro Tip: Claims for previous tax years can be backdated up to four years, so it’s worth reviewing your records for missed mileage claims.
Claiming as a Self-Employed Individual
For self-employed individuals, claiming mileage expenses is slightly different but equally essential. Let’s break it down:
1. Understand Your Options: Simplified or Actual Expenses
HMRC provides two ways to claim travel costs:
Simplified Expenses Method: Use the standard mileage rates (e.g., £0.45 per mile for cars).
Actual Costs Method: Claim based on actual expenses incurred, including fuel, insurance, and repairs.
2. Deciding Between the Two Methods
For many, the simplified expenses method is easier and more straightforward. However, the actual costs method might be beneficial if:
You have a fuel-efficient vehicle.
You incur high vehicle costs unrelated to mileage.
To illustrate:
If you drove 15,000 miles in a year, the simplified method allows you to claim £6,750 (10,000 miles x £0.45 + 5,000 miles x £0.25).
Under the actual costs method, you’ll calculate fuel, maintenance, insurance, and other costs, apportioned for business use.
3. Filing Mileage Claims on a Self-Assessment Return
For self-employed individuals, mileage expenses are reported as part of your annual self-assessment. Here’s how:
Include the total mileage expenses in the "Self-Employment" section.
Use records from your mileage log to substantiate the claim.
4. Keep Accurate Records
The key to successful mileage claims as a self-employed person is documentation. Use a mileage tracker or app to record:
Date and purpose of each trip.
Mileage covered.
Starting and ending locations.
Example:
Imagine you're a freelance consultant who drives 12,000 miles annually for client meetings. Using the simplified method:
10,000 miles at £0.45 = £4,500.
2,000 miles at £0.25 = £500.
Total claim: £5,000.
Important Deadlines to Note
Claims for the 2024-2025 tax year must be submitted by 31 January 2026.
Late submissions may incur penalties, so it’s crucial to file on time.
Potential Pitfalls to Avoid
To ensure your mileage claim goes smoothly, watch out for these common mistakes:
Claiming for Commuting: Remember, travel from home to a permanent workplace isn’t eligible.
Failing to Keep Records: HMRC can disallow claims if you don’t have proper evidence.
Incorrect Mileage Rates: Always use the latest HMRC-approved rates.
Advanced Tips for Maximizing Mileage Claims
If you work from home and occasionally visit clients, the journey from home to the client is often considered business travel.
Use apps like MileIQ or Driversnote to automate mileage tracking.
Review mileage claims periodically to ensure all eligible trips are accounted for.
Key Updates, Common Challenges, and Best Practices for 2025
Key Updates to HMRC Mileage Rules and Allowances
As of January 2025, there haven’t been significant changes to the HMRC mileage rates, which remain:
£0.45 per mile for cars and vans for the first 10,000 miles.
£0.25 per mile beyond 10,000 miles.
£0.24 per mile for motorcycles.
£0.20 per mile for bicycles.
However, the Autumn 2024 Budget introduced initiatives aimed at simplifying tax relief claims for small business owners and employees. One notable update includes HMRC’s efforts to digitize and streamline the process through their mobile app and online services. This allows claimants to upload receipts and logs directly, saving time and reducing errors.
Understanding Common Challenges in Mileage Claims
1. Confusion Between Business and Personal Mileage
One of the most frequent mistakes involves misunderstanding what constitutes business travel. For clarity:
Eligible Travel: Trips to temporary workplaces, client meetings, training sessions, and travel between job sites.
Non-Eligible Travel: Daily commuting from home to a permanent workplace.
Example: Jane, an employee, drives 15 miles daily to her office. She cannot claim this as it’s considered commuting. However, if she drives an additional 20 miles to visit a client after leaving the office, that trip is eligible for mileage relief.
2. Record-Keeping Issues
HMRC requires detailed and accurate records of your mileage. Missing or incomplete documentation is a common reason claims are denied.
Best Practices for Record-Keeping:
Use a dedicated mileage-tracking app like MileIQ, Driversnote, or TripLog to automate the process.
Maintain a physical logbook as a backup, including columns for:
Date of travel.
Purpose (e.g., “Meeting with ABC Ltd”).
Start and end locations.
Total mileage.
3. Claiming for Incorrect Rates or Expenses
Some individuals mistakenly claim higher rates than allowed by HMRC or combine non-claimable expenses like parking fines. Always double-check current rates and rules.
How to Maximize Your Mileage Relief
1. Combine Claims for Maximum Savings
In addition to mileage, you can also claim for associated expenses such as:
Parking fees (excluding fines).
Tolls for bridges or motorways.
Example: Tom drives 9,000 miles annually for work and incurs £500 in tolls and parking fees.
Mileage claim: £0.45 x 9,000 = £4,050.
Tolls and parking: £500.
Total deductible: £4,550.
2. Leverage Technology for Efficiency
HMRC’s mobile app now supports mileage claims. By linking your personal tax account to the app, you can:
Log trips in real-time.
Upload receipts for tolls and parking.
Track the status of claims or tax refunds.
3. Understand Dual Purpose Rules for Home Workers
If you work from home and occasionally travel for business, the journey from home to your client’s location may qualify as business mileage. This is particularly beneficial for freelancers or contractors.
Case Study: Tax Savings for a Small Business Owner
Let’s consider Emma, a freelance graphic designer who drove 14,000 miles for client visits in 2024-2025. Emma chose the simplified expenses method:
10,000 miles at £0.45 = £4,500.
4,000 miles at £0.25 = £1,000.
Total claim: £5,500.
Emma also incurred £700 in parking fees and tolls, bringing her total deductible travel expenses to £6,200. By claiming this amount, Emma reduced her taxable income significantly, saving nearly £1,860 in taxes (assuming a 30% tax rate).
Avoiding Common Pitfalls in 2025
Failing to File on Time: The deadline for self-assessment returns for the 2024-2025 tax year is 31 January 2026. Missing this deadline can lead to penalties.
Over-Claiming Mileage: Claiming for ineligible journeys or inflated mileage can trigger HMRC audits, potentially resulting in fines or penalties.
Future Trends and Developments
1. Digitalization of Tax Processes
HMRC’s push towards a fully digital tax system, part of the Making Tax Digital (MTD) initiative, means that more claimants will need to adopt apps and software for record-keeping. By 2026, digital submissions may become mandatory for all taxpayers.
2. Potential Rate Changes
While the rates for mileage haven’t changed in recent years, rising fuel prices and inflation could prompt HMRC to revise allowances. Staying updated on these changes is crucial.
Summary of Key Takeaways for 2025
Aspect | Details |
Mileage Rates | £0.45 (first 10,000 miles for cars); £0.25 after. |
Claiming Methods | Self-assessment or employer reimbursement. |
Eligible Travel | Business-related journeys (non-commuting). |
Record-Keeping Requirements | Dates, purposes, mileage logs, receipts. |
Deadlines | 31 January 2026 for self-assessment returns. |
By ensuring compliance with these guidelines and adopting modern tools, UK taxpayers can confidently claim mileage relief and reduce their tax burden efficiently in 2025.
Summary of All the Most Important Points
Summary of All the Most Important Points Mentioned In the Above Article
HMRC allows Mileage Allowance Relief (MAR) for eligible business travel using approved rates of £0.45 per mile for the first 10,000 miles and £0.25 thereafter.
Employees can claim the difference between employer reimbursements and HMRC rates, while self-employed individuals can deduct mileage as business expenses.
Eligible travel includes journeys for work purposes, such as client visits and temporary workplace commutes, excluding regular commuting.
Accurate mileage logs and records, including dates, destinations, and trip purposes, are crucial for claiming tax relief successfully.
Claims for previous tax years can be backdated up to four years by filing online or via a P87 form for employees.
Self-employed individuals can choose between simplified mileage rates or actual vehicle expenses, depending on which method is more beneficial.
HMRC’s mobile app and online systems allow for efficient filing and management of mileage claims with real-time updates.
Travel-related costs like parking and tolls can be claimed in addition to mileage, but not expenses like fuel for a company car.
Submitting incomplete or incorrect claims can lead to HMRC audits, penalties, or rejection of the claim.
The 2024-2025 tax year self-assessment filing deadline is 31 January 2026, with late submissions subject to penalties.
FAQs
Q1: Can you claim mileage back from HMRC if you carpool with colleagues for work?
A: Yes, you can claim mileage if you use your own vehicle in a carpool for work-related travel. However, you cannot claim for passengers unless you are reimbursing their travel costs.
Q2: Is mileage from your home to a temporary workplace considered eligible for tax relief?
A: Yes, if you travel from home to a temporary workplace, this journey is typically eligible for Mileage Allowance Relief, provided the workplace meets HMRC’s criteria for being "temporary."
Q3: Can you claim for mileage if you use a company car?
A: No, you cannot claim mileage for a company car. Instead, you may claim tax relief for the actual fuel costs incurred if not reimbursed by your employer.
Q4: Are you required to submit mileage logs when claiming through self-assessment?
A: While you don’t need to submit mileage logs with your self-assessment, HMRC requires you to maintain accurate records in case of an audit.
Q5: What is the mileage allowance rate for electric cars?
A: Electric cars fall under the same mileage allowance rate as petrol and diesel cars, which is £0.45 per mile for the first 10,000 miles and £0.25 thereafter.
Q6: Can you claim mileage relief for part-time or casual work?
A: Yes, if the travel is directly related to your work duties and is not considered commuting, you can claim mileage relief for part-time or casual work.
Q7: How can you claim mileage tax relief if you no longer have receipts?
A: Without receipts, you may rely on a well-maintained mileage log as evidence. However, the absence of documentation may lead to HMRC questioning your claim..
Q8: Is it mandatory to claim mileage relief every tax year, or can you backdate claims?
A: You can backdate claims for up to four tax years. Ensure you file before the end of the current tax year to include past years.
Q9: What happens if you make a mistake in your mileage claim?
A: If you realize a mistake in your claim, you must correct it as soon as possible by contacting HMRC. Submitting inaccurate claims can result in penalties.
Q10: Can you claim mileage relief if your employer reimburses less than the HMRC rate?
A: Yes, you can claim the difference between the HMRC approved rate and what your employer reimbursed.
Q11: Are there any special rules for contractors claiming mileage relief?
A: Contractors working through a limited company must claim mileage as a business expense and adhere to specific rules regarding allowable expenses.
Q12: Can you claim for mileage if you travel internationally for work?
A: Yes, but only for the UK portion of the journey. International travel expenses must be claimed separately under allowable business expenses.
Q13: Is cycling to work eligible for mileage relief?
A: Yes, if the cycling is for work purposes (not commuting), you can claim £0.20 per mile under HMRC’s approved rates.
Q14: Can you claim mileage for using public transport?
A: No, public transport costs are claimed as separate travel expenses, not as mileage relief.
Q15: What happens if HMRC audits your mileage claim?
A: HMRC will request detailed records, such as mileage logs, receipts, and explanations for the claimed journeys. Inaccurate or unsupported claims can lead to penalties.
Q16: Can you claim mileage relief for volunteer work?
A: You can’t claim tax relief from HMRC, but some charities may reimburse your mileage at a set rate.
Q17: Does HMRC accept mileage claims for dual-purpose trips?
A: For dual-purpose trips (e.g., part work-related, part personal), only the work-related portion is eligible for relief.
Q18: How long should you keep mileage records?
A: HMRC recommends keeping mileage records for at least six years in case of audits or reviews.
Q19: Can you claim mileage relief for attending training sessions?
A: Yes, if the training is work-related and required by your employer, the mileage is claimable.
Q20: Are there any penalties for over-claiming mileage relief?
A: Yes, over-claiming can result in penalties, including fines and repayment of incorrectly claimed amounts, with interest.
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