Mileage vs Motor Expenses

If you're using a vehicle for work purposes, being able to claim tax relief is essential.

But how to choose the right method?

Mileage

One of the methods of claiming back motor expenses is a business mileage allowance. This simplified expense allows you to claim every mile you drive, provided the journey is for work purposes.

You simply keep a log of your business mileage and multiply it by rates approved by HMRC.

Current rates are :

The first 10,000 business miles are calculated at £0.45 rate per mile For additional miles, you can claim £0.25 per mile

Take our example: If you travel 15,000 business miles in your car, the deduction for the year would be £5,750 ( 10,000 miles x 45p+ 5,000 miles x 25p )

If you use this method you are unable to claim any additional motor costs - the rate is designed to take into account everything.

Actual motor expenses

If you choose the actual cost method instead, you must keep records of all motoring costs such as: *Fuel *Insurance *MOT *Repairs, servicing and parts *Road tax

If the vehicle is used for both private and business purposes you can only claim for the proportion of the costs that relate to the business use.

Take our example: you total motor expenses for the year were £8,000. You have travelled 20,000 miles in the year but only 10,000 were for business purposes. Your deduction for the year would be £4,000 ( £8,00 x 50% ). We recommend that for the first year of any new vehicle, or a new business, you keep a track of both your business mileage and your actual motor expenses to decide which method would be more beneficial.

We also recommend that when using both methods you keep a detailed record of all business journeys, including date, purpose and destination.