Find out how to claim for business trips in your personal vehicle using the approved HMRC mileage rates 2023-24, whether you have a car (electric or fuel), motorbike or bicycle.
This guide is suitable if you are using your personal vehicle and are a:
- Sole trader
- Limited Company Director
- Employee
If you need mileage rates in relation to a company car you might need to use advisory fuel rates instead.
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.
The mileage allowance rates in this guide extend to electric cars. HMRC, to date, has not issued any special rates for electric vehicles.
What are the HMRC Mileage Rates for 2023-24?
The mileage allowance is the amount per mile that businesses and employees in the UK can claim as an allowable expense on their tax returns when they use their personal vehicles for business reasons.
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 and mean you don’t need to keep receipts.
- 45 pence per mile for cars, electric cars and goods vehicles on the first 10,000 miles travelled (25 pence over 10,000 miles)
- 24 pence per mile for motorcycles
- 20 pence per mile for bicycles
*the tax year runs from 6 April to 5 April each year
The fixed mileage rates from 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
To calculate the cash amount you can claim you need to:
- Add up the number of business miles you have travelled;
- Multiply the Step 1 by the HMRC mileage allowance rate per mile.
Here’s an example:
You are self-employed and travel to a client’s site on 1 August 2023, 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.
DID YOU KNOW
The HMRC-approved mileage rates have remained unchanged since 6 April 2011. Several petitions have been put forward to increase the mileage rate to 60p per mile to reflect the increase in fuel and vehicle maintenance costs. So far, they have been rejected.
What Counts as Business Mileage?
Business miles are those journeys that 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.
Tracking Business Mileage
Any mileage allowance payments must be supported by a record of each trip and the mileage rate claimed including:
- Date
- Location
- Miles travelled
- Reason for the trip
Depending on your preference you can track your business miles by using either a spreadsheet or a mileage tracker app.
If you are looking for an automated solution to your mileage and bookkeeping, then take a look at Xero where you can set up expense and mileage claims on their app. Learn more about the Xero free trial here.
Can You Pay Less Than the Approved Mileage Rates?
There is no impact on sole traders and businesses if they pay less than the standard HMRC mileage rates. Therefore, they don’t need to report anything to HMRC. But if you claim less than the approved rate, you’ll lose the tax-free allowance.
But if employees are reimbursed less than the HMRC-approved rates, they can claim for the difference between the amount they are paid and the HMRC-approved rate as a 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.
Can You Pay More Than the Approved Mileage Rates?
A sole trader cannot claim more than the standard mileage allowance rate set by HMRC against their taxes.
If an employee is paid more than the set rate any additional payments will attract income tax and National Insurance by way of a P11d tax.
