We’re here to help you with the headache of figuring out how to claim tax relief when using your vehicle for business journeys.
Generally, if you have a car provided by your company, you can claim back mileage for your business travel. This will be done differently whether the company pays for your fuel, or you do.
The rate which you can claim back mileage on a company vehicle is different to the rate you would pay for your personal vehicle.
You can opt for the company to pay for all your fuel, both for private and business journeys, but you will have to pay fuel benefit tax.
Fuel benefit tax is based on £22,600 for the current tax year, or £23,400 for 2018/2019. This is then multiplied by the car’s ‘Benefit-in-kind’ (BIK) percentage and your salary tax band.
Benefit-in-kind is a tax on employees who receive perks on top of their salaries. So, if you have a company car, you’ll have to pay this tax in addition to fuel benefit tax.
To pay the minimum amount of tax possible, we recommend you choose a company car with low CO2 emissions.
If you clock a high number of miles, then you may want to opt out of the fuel benefit.
HM Revenue and Customs (HMRC) sets advisory fuel rates (AFR) every year. You’ll use this if you pay for your own fuel and need to reclaim the miles for business.
These advisory fuel rates vary from car to car, depending on engine size and fuel type. The rates are updated four times a year, so you need to be prepared for them to change. It’s also important to remember that these are only guidelines, so your company’s rates may be slightly different.
You can view the latest advisory fuel rates to get a rough idea how much you can reclaim when paying for your own fuel.
The rates in place from the 1st of March 2018 are as follows:
And if you're driving a diesel car:
A pool car is a company vehicle which is available for use by one or more employees.
If using a pool car, your company will also pay for the fuel. Or if you pay, you should file your receipt, so they can reimburse you afterwards.
You don’t have to pay for the tax of a pool car.
This is commonly referred to as grey fleet.
HMRC sets Approved Mileage Allowance Payments (known as AMAPs) for employees who use their own car for business use. Most companies use these when asking employees to reclaim business miles. So, if you’re using your own vehicle for business, you’ll be able to claim AMAPs.
To work how much you can reclaim, add up your business mileage for that tax year, and multiply it by the approved mileage rates.
In contrast to if you’re using a car company, the engine size is irrelevant.
If you’re paid a lower mileage rate, you can claim tax relief on the difference. For example, if the company pays 35p per mile up to 10,000 miles, you can claim the remaining 10p per mile from the government.
Are you paying for fuel personally and claiming a mileage allowance for business use of the car, or is the company is paying for all fuel and charging you mileage for personal use of the car?
If so, then you can either use a set rate published by HMRC or calculate the actual fuel cost/mile.
Note: If you’re using the actual fuel cost/mile then it’s up to you to keep records to prove that the figures you use are accurate for your car. These could be fuel receipts or mileage records over a period of months. Otherwise, you may find yourself with a HMRC penalty.