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Business Mileage And Business Travel – What Can Be Claimed?Written on November 8, 2018 by Kirk Rice LLP

Business Mileage And Business Travel – What Can Be Claimed?

The tax system in the UK offers tax reliefs and exemptions to employees (including company directors) and the self-employed for various costs, etc. relating to their work. However, these tax deductions generally come with strings attached in the form of conditions and record keeping requirements.

A useful tax exemption is available for payments by employers to employees for business travel in their own cars, up to a certain level ‘approved mileage allowance payments’, i.e. 45p per mile for the first 10,000 miles in the tax year, and 25p per mile after that.

Tax relief for use of own car

A deduction is also available, for example, to employees for business travel in their own cars who receive lower mileage allowance payments than the approved amounts mentioned above. This deduction is named ‘mileage allowance relief’ (MAR). The amount of MAR to which the employee is entitled is the difference between the total mileage payments (if any) to the employee in respect of the vehicle and the approved amounts applicable.

Qualifying travel expenses

Qualifying travel is a necessary condition for both travelling and subsistence expenses to be treated as an exempt expense, and also in the use of business mileage rates for cars and vans. A business journey is one which either involves travel:

  • from one place of work to another or
  • from home to a temporary workplace or vice versa.

However, journeys between an employee’s home and a place of work which he or she regularly attends are not business journeys. These journeys are ‘ordinary commuting’ and the place of work is often referred to as a permanent workplace. This means that the travel costs have to be borne by the employee.

The term ‘temporary workplace’ means that the employee attends the place for a limited duration or temporary purpose. However, some travel between a temporary workplace and home may not qualify for relief, if the trip made is ‘substantially similar’ to the trip made to or from the permanent workplace. ‘Substantially similar’ is interpreted by HMRC as a trip using the same roads or the same train or bus for most of the journey. There will be many variations of types of journeys undertaken by employees, so ensuring that it is a business journey is critical, especially as the term ‘travel expenses’ includes the actual costs of travel together with any subsistence expenditure and other associated costs, that are incurred in making the journey, such as toll or congestion charges

Record keeping and evidence of business mileage

Any HMRC enquiry into the taxpayer’s MAR claim is likely to involve requests for information, including documentary evidence confirming the taxpayer’s travel, together with details of annual mileage for the tax year in question, and a daily mileage log confirming the business miles travelled.

Evidence such as MOT certificates for the vehicle in question can be requested by HMRC to support the mileage purported to have been travelled. Of course, this exercise only confirms that the vehicle has recorded the requisite mileage. The next hurdle is to demonstrate that the mileage on which the MAR claim is based represents qualifying business travel. A detailed business mileage log is generally helpful evidence.

Employees whose actual expenditure on the vehicle (including insurance, repairs, loan interest relief) is less than the MAR amount is not chargeable to tax on the difference. On the other hand, if the actual expenditure is greater than the MAR amount, no additional tax relief is due. Travel related expenses not covered by the MAR rules (e.g. parking and hotel expenses) are subject to the normal tax relief rules for travel and subsistence.

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Any reader interested in understanding more about your business mileage claims, should telephone Viru Patel in our Ascot office on 01344 875 000 or Hadley Baldock in our Putney office on 0208 789 8588 or email info@kirkrice.co.uk.

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made. Information is correct at the time of publishing but details may have changed since.