A guide to HMRC mileage rates 2022-23 for cars, motorcycles and electric vehicles. This guide is suitable for anyone who wants to claim business mileage and is registered as self employed (sole trader) or a Limited Company owner. It also includes a company’s employees wanting to be reimbursed for travel costs, per mile.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
How Do HMRC Mileage Rates Work?
The mileage allowance is the amount per mile that businesses in the UK can claim as an allowable expense on their tax returns – whether self-assessment for sole traders, corporation tax returns or partnership returns. The rates are different according to the type of vehicle used but are set at a flat rate under what is known as simplified expenses.
What are the 2022-23 HMRC Mileage Rates in the UK?
The mileage allowance rates 2022-23 tax year:
- 45 pence per mile for cars and goods vehicles on the first 10,000 miles travelled (25 pence over 10,000 miles)
- 24 pence per mile for motorcycles
- 4p per mile for fully electric cars
The mileage rates set by HMRC are set at a rate per mile that contributes to the cost of wear and tear on a vehicle as well as fuel, MOT and servicing. Other car expenses are not tax deductible such as repairs.
How to Calculate Business Mileage Expenses
Mileage can be claimed on eligible business travel in personal vehicles at a set rate per mile travelled. Here’s how to calculate the amount of mileage that can be claimed as a business expense:
- Add up the number of business miles you have travelled;
- Multiply the number of miles in Step 1 by the HMRC mileage allowance rate per mile.
Here’s an example:
You are self-employed and travel to a clients site on 1 August 2022, driving 50 miles away from your normal place of work using your personal car and back again. You can claim for business travel of 45p x 100 miles = £45.
What Counts as Business Mileage?
Business miles are those journeys travelled which are necessary for work reasons (you cannot claim for personal mileage or your ordinary commute). That’s occasions such as when you or an employee goes to see a client, supplier or have to work from a temporary workplace.
Keeping Business Mileage Records
Any mileage allowance payments must be supported by a record of each trip and the mileage rate claimed including:
- Miles travelled
- Reason for the trip
The easiest way to claim business mileage is to use a mileage claim form.
Can You Pay More or Less Than the UK Mileage Rate?
A sole trader cannot claim more than the standard mileage allowance rate set by HMRC against their taxes. They can claim less but will lose out on the tax-free allowance.
For Limited Company owners, they can choose to pay more than the HMRC mileage rates but any additional payments will attract income tax and National Insurance by way of a P11d tax.
Paying Less than the HMRC Mileage Allowance
The is no impact on sole traders and Limited Companies if they choose to pay less than the standard HMRC mileage rates. Therefore, they don’t need to report anything to HMRC.
However, employees of a business who have received less than the standard mileage rate may be able to claim the work mileage tax rebate. This means they’ll get a tax rebate for any unused allowance, usually through their tax code and payslip.
Alternatively, the business could opt to join a scheme called Mileage Allowance Relief Optional Reporting Scheme (MARORS). Under the rules of the MARORS scheme, the employer can issue a report to HMRC of any amounts paid below the standard rates on behalf of their employees.