How to Claim the Work Mileage Tax Rebate

Find out how to claim a work mileage tax rebate, including how to check the tax refund you are eligible to receive, which tax form you need for your claim and how to make a backdated claim if you’ve missed a tax refund in previous years.

1. What is the Work Mileage Tax Rebate?

The work mileage tax rebate is a tax refund given when employees use their personal vehicles for work reasons, but their employers pay them below the HMRC standard mileage allowance rates. The standard mileage allowance rates are:

  • 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

Say, for example, you travel 100 miles in your personal car for work, you are eligible for a tax-free payment of 45p for each mile you drive. Your employer is not obligated by law to pay you the full 45p per mile, but if they do pay you less, then you may be able to claim a tax refund from HMRC for the difference you are owed.

2. How to Calculate the Work Mileage Tax Rebate

To calculate the work mileage tax rebate you may be owed, you’ll need to calculate the number of eligible business miles you have travelled and multiply this by the rate per mile you have missed out on, depending on the type of vehicle you used. Here’s an example:

Bob is employed as a consultant and travels to a clients site several times throughout the year using his own car. His business mileage amounts to 5,000 miles for the tax year and his employer reimburses him 30p per mile, a total of £1,500 (5,000 x 30p). The mileage rate his employer has used to reimburse him is 15p below the HMRC tax-free rate of 45p. Bob has therefore missed out on 15p per mile or £750 of tax-free mileage (5,000 x 15p).

Bob can apply to HMRC for tax relief on the additional mileage and he will save tax at his highest rate of income tax. So if Bob is a 40% taxpayer he will save £300 on his tax bill.

3. How to Claim a Tax Rebate on Work Mileage

How you claim your tax rebate depends on how much you are claiming and your personal circumstances.

3.1 Claims Below £2,500

  1. By Post: you’ll need to complete a P87 form online post it to the address shown at the end of the form;
  2. Go Online: you’ll need to either creating an HMRC online account unless you have one already;
  3. By Phone: if you have already made a claim in the past, call HMRC on 0300 200 3300. Make sure you have your national insurance number ready;
  4. On a self-assessment tax return form, if complete one.

Whichever method you choose to claim your tax rebate, you’ll need to disclose:

  • Your total work mileage
  • The amount your employer has reimbursed you

Here’s how the mileage allowance relief would appear for Bob if he filled out a P87 form online:

tax rebate work mileage
tax rebate work mileage
How to Claim the Work Mileage Tax Rebate

3.2 Claims Over £2,500

If your claim is for over £2,500 then you need to complete a tax return. To do this you’ll need to register for self-assessment – the process can take up to 10 days and once successful you will receive a welcome letter from HMRC with your UTR number.

4. How is the Work Mileage Tax Rebate Paid

Once approved by HMRC, both you and your employer will receive a P6 notification from HMRC notifying you of a change to your tax code. Your employer will then change your tax code and you’ll receive your rebate through your payslip.

5. What Evidence Do You Need to Support Your Work Mileage Tax Rebate

Any work mileage tax rebate claims must be supported by a record of each trip and the mileage rate claimed including:

  • Date
  • Location
  • Miles travelled
  • Reason for the trip

You cannot claim travel from work to your office. 

6. Backdated Claims 

If this is the first time you have claimed for the work mileage tax rebate you can go back 4 years, to make a backdated claim for anything you’ve missed. It is recommended to call HMRC on their tax rebate number 0300 200 3300 to discuss backdated claims before you submit them.

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About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.

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