PUBLISHED JUL 28, 2020 • 4 MIN READ
This article will guide you through the process of claiming Mileage Allowance Relief (MAR) for your business mileage. Here you’ll learn:
HMRC really does love an acronym! The easiest way we have to keep track of the two acronyms here is:
Mileage Allowance Relief (MAR) is a tax deduction for employees that have incurred business mileage and are not fully reimbursed by their employer. Keep in mind that different rules apply if you use a company car (we’ll come to that later in the article).
If you earn less than the personal allowance and therefore do not pay tax, you will not qualify for tax relief.
When you use your personal vehicle for business purposes, many employers will reimburse you per mile with Mileage Allowance Payments (MAP). HMRC provides advisory mileage allowance rates that your employer can use - the current rate is set at 45p. Read more about the current HMRC mileage rates.
Let's go through a quick example of how to calculate mileage reimbursement at the advisory rate:
In one year you drive 5000 miles for work purposes and your employer uses HMRC’s advisory rate. To calculate your reimbursement, you simply follow the below:
[miles] x [rate]
5,000 x 0.45 = 2250 GBP
However, do keep in mind that following HMRC’s advisory rate is a suggestion to your employer and not a requirement. If you don’t receive mileage allowance, you are entitled to claim MAR on all your work miles at the advisory mileage rates.
If you receive a MAP, the outcome will be based on your individual circumstances, as per the below:
Additionally, If you use a company car and your employer does not reimburse you with the full Advisory Fuel Rates (AFR) you can claim MAR on your fuel costs for business trips. For more on this specifically, you can check out HMRC’s website.
The Mileage Allowance Relief is based on HMRC’s approved mileage rates. The current rates are:
You can only receive MAR for the amount not covered by your employer. For example:
You have driven 4500 miles for work this year with your car but your employer has only reimbursed you with 30p per mile.
Using the same calculation from above, you will see that:
[miles] x [rate]
4,500 x 0.30 = £1,350.00 GBP in received mileage allowance.
In this case, you are entitled to claim MAR for the additional 15p per business mile driven.
4,500 x 0.15 = £675.00 GBP in MAR.
You can claim tax relief at the end of the tax year from HMRC. To qualify here’s what you need to do:
If you usually do not need to complete a tax return, you can use form P87 on HMRC’s website to claim MAR. If your total expenses claim is more than £2,500, you will need to use your Self Assessment tax return.
In order to claim Mileage Allowance Relief, you will need to keep records of your business trips throughout the year. For your records to be HMRC compliant they must include the following details:
You can supply the same records to your employer and HMRC as long as they include the details listed above.
It’s up to you to decide if you would rather keep analogue or digital records, but there are several phone applications (including ours) that create clear, tax compliant records automatically - saving you quite a bit of time.
That's it for our guide to the Mileage Allowance Relief! We hope we've been of assistance :)
This material has been prepared for general informational purposes only and is correct at the time of publishing. It should not be taken as professional advice from Driversnote. We recommend seeking independent legal, taxation, or financial advice from a professional to check how this information relates to your own circumstances.