Find out the current mileage rates set by HMRC that sole traders, business owners and employees can claim, which journies are eligible and how to make a claim for the mileage allowance.
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.
HMRC Mileage Rates for 2024
Every tax year, HMRC sets out flat rates that employees, business owners and sole traders can use to claim the cost of petrol when they use their personal vehicles* for business reasons.
The mileage allowance rates for 2024 are:
- Cars and electric cars: 45 pence per mile for the first 10,000 miles, 25 pence thereafter
- Motorcycle: 24 pence per mile
- Bicycles: 20 pence per mile
These rates cover the cost of fuel as well as incidental costs like wear and tear, MOT and servicing. You cannot claim other expenses such as repairs.
*The rates in this guide relate the the use of personal vehicles. If you are driving a company car then you might need to use advisory fuel rates instead.
Did You Know?
The HMRC mileage rates have remained unchanged since 6 April 2011. Several petitions to raise the mileage allowance to 60 pence per mile, reflecting increases in fuel and vehicle maintenance costs, have been submitted. So far, they have been rejected.
How to Calculate Your Business Mileage Claim
To calculate the amount you can claim you need to:
- Add up the number of business miles you have travelled;
- Multiply the result of Step 1 by the HMRC allowance pence per mile applicable to you and your vehicle.
You use your car to travel to a client’s site 50 miles away from your office. You can claim £45 for the journey (45p x 100 miles).
Keeping a Mileage Log
The pence per mile that you can claim is part of the simplified expenses scheme. It eliminates the need for you or employees to keep petrol receipts to support any mileage claims. However, it is essential to keep a mileage log of business trips as evidence that it was business-related.
- Date of trip
- Number of miles travelled
- Reason for the business trip
You can maintain this information on a spreadsheet or by subscribing to a mileage-tracking app.
Mileage Tracking Apps
There are many mileage-tracking apps available, such as Driversnote. Although they may all look and work slightly differently, fundamentally they track your travel via GPS, let you tag your trips for business or personal logging it and automatically calculate your mileage expenses for your tax return.
Alternatively, accounting software, such as Quickbooks and Freshbooks, also include mileage tracking options that integrate with your expense tracking.
A mileage tracking app is a great idea if you do a lot of business miles in your car .
What Counts as a Business Journey?
A business journey is a trip that is necessary for work reasons. For example, see a client, supplier or working from a temporary workplace.
You cannot claim for personal travel, your ordinary commute and, in some cases, a place you work from regularly.
READ MORE >>> Claiming Travel as a Business Expense
Can You Pay More or Less Than the HMRC Mileage Allowance?
Business’ and business owners can choose to pay fuel rates of their choice instead of using the HMRC mileage allowance, but there are implications depending on their business structure:
As a sole trader, you can opt to claim your mileage at a lower rate than the one set by HMRC but you will not be maximising the amount you can claim as a tax deduction.
Sole traders cannot claim more than the standard mileage allowance rate set by HMRC against their taxes.
Employers can choose to pay their employees less than the pence per mile fuel rate set by HMRC. In these cases, their employees can claim a work mileage tax rebate for the difference. They’ll get a tax rebate for unused allowance, usually through their tax code and payslip.
Alternatively, the employer could opt to join a scheme called Mileage Allowance Relief Optional Reporting Scheme (MARORS). This is where the employer takes the responsibility of reporting any amount paid below the HMRC rates on behalf of their employees.
Employees paid more than the HMRC rates per mile will be required to pay P11d tax on the excess amounts.
More on Claiming Business Expenses