Mileage allowance

I have my own business and the car I use for business trips is held outside of the business. What am I allowed to claim as a mileage allowance and what are the VAT implications?

1st June 2012

HMRC sets 'allowable' Mileage Allowance Payments (MAPs). Currently, for cars and vans the MAPs are:

  • 45p per mile for the first 10,000 miles in a tax year
  • 25p per mile for mileage in excess of 10,000 miles in a tax year
  • 5p per mile for any passengers

You must keep records of all business mileage and VAT receipts for your fuel costs. Any mileage claimed in excess of the HMRC rate will be classified as a benefit and must be included on a P11D form.

The MAPs are intended to cover all the running costs of the vehicle. As a result, only some of it is VATable and this is calculated based on the Advisory Fuel Rate for your vehicle, which can be found on HMRC’s website.

The structure of your motor expenses can lead to a number of difference tax consequences, so you should be advised to seek professional advice from your local TaxAssist Accountant if you are doing significant mileage.

By Jo Nockels

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