What Car? Q&A - Can I claim mileage allowance?

Q: I use my privately owned car for company business. Is there a rule or guide as to an appropriate and fair mileage allowance?
John Duffield

A: Yes there is – the Inland Revenue's maximum tax-free reimbursement from your company for using your car for work is set at 40 pence per mile for the first 10,000 miles, and 25ppm after that.

If you were to travel 15,000 miles a year, the maximum tax-free reimbursement you could receive would therefore be £5250 (£4000 for the first 10,000 miles and £1250 for the remaining 5000 miles).

If your company is offering more than these rates you will have to pay tax on the difference, so if your company is offering 41p for every mile that you do, you will pay tax on an additional £900.

If your company offers less than these approved mileage rates, you can claim income tax relief on the difference. So if travel 15,000 miles and get 39ppm for the first 10,000, and 24ppm on any remaining miles, you can claim tax relief on £150 (£4000 maximum less the £3900 you're receiving for the first 10,000, and £1250 less the £1200 you get for the next 5000).