Claiming business mileage expenses
Can you pay any mileage allowance you want?
Yes, it’s true! You can even offer your employees £10 per mile if you feel generous – but you’ll have to pay tax on it.
Mileage Allowance Payments (MAPs) are the payments your company makes to an employee for expenses related to the use of their own vehicle for (i) journeys that form part of their work duties and (ii) journeys for their attendance at a temporary workplace. However, if you want to avoid paying tax on these payments, you have to follow the approved mileage allowance guidelines.
Are all mileage allowances are tax-free?
No. Only Approved Mileage Allowance Payments are tax-exempt.
The following are the current Approved Mileage Allowance Payments rates per business mile.
Type of vehicle First 10,000 miles Above 10,000 miles
Cars and vans 45p 25p
Motorcycles 24p 24p
Bicycles 20p 20p
So, if an employee travels 12,000 business miles in their car or van, the approved amount for the year would be £5,000 (10,000 x 45p plus 2000 x 25p).
Oh yes, and just because an employee might change their car or van, it doesn’t mean they can start the count again for their new vehicle. When they say you can claim the ‘first 10,000 miles for each vehicle’, it only applies to 1 vehicle per person per year. So don’t even think about trying to get away with claiming unscrupulously!