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Tax relief for business mileage

Tax relief for business mileage in your own vehicle

You may be able to get tax relief for business mileage if you use your own vehicle for work. It can be a car, van, motorcycle or cycle.

Just fill in the form P87 for each tax year and send it of to HMRC, it’s that simple!

You can work out the amount of tax relief – called ‘Mileage Allowance Relief’ – to which you are entitled like this:

1. add up your business miles travelled in the tax year
2. multiply your business miles by the approved mileage rate to work out the approved amount – follow the link below for the latest approved mileage rates
3. add up any mileage allowance payments received from your employer
4. compare any mileage allowance payments received with the approved amount

If the approved amount’s more, you’re entitled to Mileage Allowance Relief on the difference.

For example, you use your own car for 900 business miles and your employer pays you 30p per mile. The approved amount is £405 (900 times 45p). The allowance you get from your employer is £270 (900 times 30p). Your Mileage Allowance Relief is £135 (£405 less £270). The Mileage Allowance Relief will reduce the amount of income you pay tax on, so your tax bill will reduce by £135 at 20% (if you’re a basic rate taxpayer) or at 40% (if you’re a higher rate taxpayer) and at 50% (if you’re an additional rate taxpayer)

You are only entitled to Mileage Allowance Relief if your employer pays you:

  • no mileage allowance
  • less than the approved amount
    If your employer pays you more than the approved amount, you’ll have to pay tax on the extra.

 

From 2011-12

First 10,000 business miles in the tax year

Each business mile over 10,000 in the tax year

Cars and vans

45p 25p

Motor cycles

24p 24p

Bicycles

20p 20p

 

PDF ICONp87 -Form

Please return the form to:

HM Revenue & Customs,

Pay As You Earn,

PO Box 1970,

Liverpool,

L75 1WX.

Posted: 16th July 2013

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