Claiming for mileage when you are self-employed, or a company director is one way of reducing your tax bill and helping to cover those increasing travel costs. Recording your business mileage and understanding the logs you need to keep can be challenging for many new and old business owners, but it doesn’t have to be; our guide to what you need to know about claiming business mileage will help you understand everything you need to know.
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showWhat Is Classed as Business Mileage By HMRC?
Simply – any millage that is completed wholly and exclusively for business purposes. To break that down further, it could be:
- Travelling to a client meeting.
- Delivering/collecting goods or services away from your usual place of work.
- Travel to a temporary workplace (if for less than 24 months).
What cannot be claimed is things like travelling from home to your usual place of work or any journeys that were for personal reasons.
It is important to remember that mileage can ONLY be claimed if you are using a personal vehicle to perform the journey. Other tax reliefs and rules are in place if the company owns the vehicle in which the journey is taking place.
How Much Can Be Claimed For Mileage?
Depending on your mode of transport and if you are a sole trader or limited company director depends on the rates that can be claimed.
For company directors:
- Car/Van under 10,000 miles – 45p per mile
- Car/Van over 10,000 miles – 25p per mile
- Motorcycle – 24p per mile
- Cycling – 20p per mile
For sole traders:
- Car/Van under 10,000 miles – 45p per mile
- Car/Van over 10,000 miles – 25p per mile
- Motorcycle – 24p per mile
Mileage claims cover everything you require to make the journey; a common misconception is that it is just for the fuel, which is incorrect. Mileage claims cover the fuel, wear and tear on your vehicle, insurance and road tax etc.
Cycling mileage cannot be claimed currently by sole traders. However, you may be able to claim the costs of buying a bicycle for work and consumables such as tyres or maintenance if it should require it.
What Records Need to Be Kept for Mileage Claims?
Strict but straightforward records need to be kept for HMRC purposes when it comes to claiming mileage. You need to keep a record of:
- The journey details such as time and locations.
- The distances involved (both one way and return).
- A valid fuel receipt (if applicable).
It is also important to remember that if your journey was not the most straightforward route between point A and point B, keep a record of why this was. For instance, if a road closure or additional stop affected your journey, this will assist you if you are ever audited by HMRC.
You will need to keep mileage claim records for a minimum of 7 years alongside the rest of your accounts, so ensure that you keep your receipts safe and any other paperwork. We have some handy tips about keeping receipts in another of our blog posts: What Business Owners Need to Know About Keeping Receipts.
When Can a Mileage Claim Be Processed?
Mileage claims cannot be made in advance or paid in advance. They can only be made once the actual journey has taken place. If your business does not immediately have the funds to cover the claim, don’t worry – you can pay yourself the expense whenever the funds become available.
Mileage Claims Summary
You should now grasp what can be claimed, when it can be claimed, and what you need to keep to claim business mileage. Many business owners think it is a more complex process than it is, so we hope that you have found our guide helpful! Why not check out some of our other handy guides and blogs if you have?
If you are still struggling with your business mileage claims and need the assistance of an accountant, why not speak to us here at RJF Accountancy? We provide end to end services for our clients, from simple bookkeeping to full-service packages. Get in touch today if you need any help or further information.