Mileage Tax Relief Guide

Guide to Claiming Tax Relief on Mileage Expenses

(Where Reimbursed Below HMRC Rates)

Step 1: Confirm Eligibility

You may claim tax relief if:
– The mileage relates strictly to business travel (not ordinary commuting).
– You are using your own vehicle.
– Your employer reimburses you below the HMRC Approved Mileage Allowance Payments (AMAP):
– 45p per mile for the first 10,000 business miles in a tax year.
– 25p per mile for any business miles over 10,000.

Step 2: Calculate the Mileage Shortfall

If your employer pays less than these rates, you can claim tax relief on the difference.

Example:
– You drive 8,000 miles for business.
– Employer reimburses 20p per mile.
– HMRC allows 45p per mile for the first 10,000 miles.
– Difference: 25p per mile.
– Relief available: 8,000 x GBP0.25 = GBP2,000.
– If you pay tax at 20%, you could receive a GBP400 refund.

Step 3: Special Note for Community Carers and Similar Roles

If you work as a carer in the community or in a similar mobile role:
– You cannot claim tax relief on your journey from home to your first client or from your last client back home.
– These are considered ordinary commuting journeys under HMRC rules.
– You can only claim relief for mileage between clients during the working day.

Step 4: Keep Accurate Records

Maintain a mileage log detailing:
– Dates of travel
– Locations
– Purpose of each trip
– Distances covered
– Records of employer mileage payments or reimbursements

Step 5: Submit Your Claim (Under GBP2,500)

If your total mileage expense shortfall is under GBP2,500 for the tax year, claim via Form P87.

Option A: Online
– Visit: www.gov.uk/tax-relief-for-employees
– Submit Form P87 via your Government Gateway account.

Option B: Paper Form
– Download and complete Form P87.
– Post it to: HMRC, Pay As You Earn, PO Box 1970, Liverpool, L75 1WX

Step 6: Wait for HMRC’s Response

– HMRC may amend your tax code or issue a refund directly.
– Typical processing time: 6 to 12 weeks.

Step 7: Retain Documentation

– Keep all records for at least 22 months after the tax year ends in case HMRC requests evidence.