Q. I have recently changed jobs and need to use my car to make business journeys. Will I have to pay tax on the mileage expenses my employer reimburses me for these trips?
A. Employers can pay employees a tax-free and national insurance-free amount for every mile they drive on business duties, currently:
- 45p per mile for the first 10,000 miles
- 25p per mile for each subsequent mile
- 24p per mile for motorcycles
- 20p per mile for bicycles
- 5p per mile extra for each passenger carried on work-related journeys
If your employer reimburses your mileage as less than these rates, you can claim the balance (but not the 5p per mile passenger extra) against your taxable income. For instance, if your employer gives you 30p per mile for 1,000 miles, you have a 15p per mile shortfall and can claim £150 against your taxable income. The big exception to business mileage is the daily commute from home to work and back again.