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What are the rules when using a private vehicle for business journeys?

What are the rules when using a private vehicle for business journeys?

Stuart Datlen


Employers can pay employees a fixed rate per mile to cover the costs of using their own vehicles on company business. If your employer does not pay or reimburse these expenses, or pays a rate below the approved amounts (AMAPs-see below for detail) you may be able to claim a deduction from your income to claim back tax. 

Company business can includes trips such as travel from your office or place of work to visit your customers using your own vehicle. For example, this may apply if you are an account manager visiting a client’s office. Please note, however, it is not possible to claim for travelling to and from your usual place of work unless it is temporary-should you believe this is the case obtaining further advice is recommended to ensure you meet the relevant requirements.

The maximum amount that can be paid by an employer per business mile is known as an Approved Mileage Allowance Payment (AMAP). These rates also apply where an employee uses his or her own electric or hybrid car for business journeys.

The present approved rates per mile are:
  • Cars and vans - 45p per mile for the first 10,000 miles and then 25p per mile.
  • Motorcycles – 24p per mile.
  • Bikes – 20p per mile.
If your employer pays you more than these rates the excess paid over the agreed rates will be taxed as a benefit in kind. An employee would be required  to declare this benefits at the tax year end on form P11D and the Employer would pay Class 1A NI on this excess.

If you have more than one job and your employers are not connected with each other, you can have a 10,000 mile limit for each job you hold. If you have more than one job and your employers are connected with each other, you have only one 10,000 mile limit to be divided between all related jobs.

If your employer pays you for taking a passenger who is also a company employee on a business journey, up to 5p per mile may be paid to you on a tax- and NIC-free basis; anything over an allowance of 5p per mile is taxable and NIC-able.

The mileage rate covers the costs of running and maintaining the vehicle, such as fuel, oil, servicing, repairs, insurance, vehicle excise duty and MOT. The rate also covers depreciation of the vehicle. This is why the first 10,000 miles are paid at a higher rate.

If you are considering switching to a company car, please be aware there are tax benefits to selecting all-electric or hybrids compared to other cars with higher CO2 emissions.

For tax advice on your private vehicle journeys, or if you are considering a switch to an electric car, please contact a Moore adviser