Knowledge Centre

Mileage allowance for a car you personally own

If you use your own personal car, the following rates can be claimed for business journeys per tax year:

First 10,000 miles: Cars 45p, Motor Bike 24p, Cycle 20p

Over 10,000 miles: Cars 25p, Motor Bike 24p, Cycle 20p

You must keep a log of the miles travelled, the purpose of each journey, date and time. This is easy to do on a spreadsheet and can add up to a significant tax saving.

At the end of each month you put the mileage allowance through your bookkeeping and make a bank transfer from your company bank account to your personal account.

NOTE: all fuel and car expenses should be paid for by you personally and not the business if you intend to use the mileage allowance rates.

Travelling by train, bus, plane, etc are also eligible travel expenses, always keep receipts for the journeys made. Using taxis for all or a substantial part of your travelling is not accepted by HMRC.

Mileage allowance for a company car.

The mileage allowance for a car you personally own covers fuel, maintenance and other motoring costs. The mileage rates for company cars just cover the cost of fuel used in business travel and are therefore lower. These rates are known as Advisory Fuel Rates (AFR).

Advisory fuel rates are based on the type of fuel your company car uses and how big the engine is. HMRC review these rates and update them every 3 months. You can find a detailed list of these here.

You must keep a log of the miles travelled, the purpose of each journey, date and time. This is easy to do on a spreadsheet and can add up to a significant tax saving.

At the end of each month you put the mileage allowance through your bookkeeping and make a bank transfer from your company bank account to your personal account.

NOTE: all fuel expenses should be paid for by you personally and not the business.

Fully electric company car

If you have a fully electric company car your company can now simply repay you for the electricity used to charge the car at home. There will be no Benefit In Kind personal tax charge and no Employer’s National Insurance charge. The reimbursement cost will be a Corporation tax deductible expense for your company.

At present your company can not reclaim the VAT charged on any electricity used at home to charge your fully electric company car.

The cost of the electricity reimbursed must solely be for the company car (personal or business use of the car are both fine) - it should be relatively easy to keep track of as all home electric car chargers have the ability to tell you how much electricity has been used to charge the car.