Katerina Swanson
If you use your own vehicle for work, you may be able to claim tax relief on the approved mileage rate, which covers the cost of owning and running your vehicle, including fuel. The amount you can claim depends on whether you use a vehicle that you have bought or leased with your own money, or a vehicle owned or leased by your employer. If you are not paid a mileage allowance, you are entitled to claim Mileage Allowance Relief (MAR) on all your work-related driving at the advisory mileage rates.
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What You'll Learn
Claiming for fuel expenses when using your own car for work
If you use your own car for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle, including fuel and electricity expenses for business trips.
Some employers reimburse mileage expenses on a tax and National Insurance Contributions (NIC) free basis, so you do not have to claim relief. If your employer does not reimburse these expenses, you may be able to claim a deduction from your income. You will only be able to claim tax back if you are a taxpayer.
Business travel includes trips such as travel from your office or place of work to visit customers, travel from home to a temporary workplace, and itinerant travel. For example, this may apply if you are a service engineer and move from place to place during the day. You cannot generally claim tax relief for the expense of ordinary commuting, i.e. travel between your home and permanent place of work.
If you are using your own car for significant business travel and incurring mileage expenses, you can claim tax relief from HMRC up to the maximum allowed under the AMAP rates. You should keep a log of business travel, including dates, destination, purpose of the trip, and how many business miles you travelled.
If your employer reimburses you according to the advisory fuel rates, this counts as partial reimbursement under the AMAP system. You must take the amount reimbursed by your employer into account when working out your tax relief claim.
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Claiming for fuel expenses when using a company car
If you use a company car for business travel, you can claim the cost of fuel and electricity, as long as accurate records are kept. The rate is 45p per mile for the first 10,000 miles in the financial year and 25p per mile after that. This is the tax-free approved mileage allowance.
If you travel with fellow team members from the same business, the driver can claim an additional 5p per mile for each qualifying passenger. So, for example, if five members of staff travelled together for work, 65p per mile could be claimed (45p for the driver, plus 4 x 5p per mile for each passenger).
It's important to note that claiming mileage covers all vehicle expenses, including insurance, tax, fuel, servicing, and maintenance. This means that for a vehicle in your own name (a personal vehicle), you cannot claim car maintenance, tyres, insurance, road tax, etc. separately.
Company cars present a different scenario. This is where you are driving a vehicle that is registered in the company name and not your own. In this case, business owners can reclaim the VAT on fuel, but they must account for the personal use of the vehicle, which is deemed a 'benefit in kind'. This means both the employer and employee face tax implications.
If the company pays for all fuel (business and personal), the tax efficiency can quickly erode due to the 'Fuel Benefit Charge'. This is where a fuel card can be useful, as it provides a clear record of fuel expenses. However, business owners must distinguish between personal and business use and reimburse the company accordingly to avoid unexpected tax bills. This means keeping records of every journey, which may be undesirable for some.
An alternative is to pay for all fuel personally and then claim back the business mileage at the Advisory Fuel Rate (AFR) set by HMRC. This rate is purely for fuel and doesn't include other vehicle costs. Using AFRs can streamline the VAT recovery process and remove the risk of the Fuel Benefit Charge.
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Mileage allowance payments
In the UK, HMRC allows employees to claim tax relief on their mileage allowance. The approved mileage rate for the first 10,000 miles travelled in a tax year is 45p per mile, and this rate drops to 25p per mile for any additional miles. If an employee carries other employees as passengers for business purposes, they can claim an extra 5p per mile. It is important to note that this 5p limit is the maximum amount that can be claimed without treating it as taxable income.
To claim mileage allowance, employees must maintain records of their business usage, including the dates of travel, the purpose of the journey, the starting and destination points, and the total miles covered. This documentation is essential for calculating the reimbursement amount and ensuring compliance with tax regulations.
It is worth mentioning that if an employee uses their own vehicle for work and does not receive the full approved business mileage allowance from their employer, they may be eligible for a work mileage tax rebate from HMRC. This rebate ensures that employees can recover the costs associated with using their personal vehicles for work purposes. Similarly, in the US, the Internal Revenue Service (IRS) allows individuals to take a deduction based on the mileage used for business, charitable, medical, or moving purposes.
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Claiming for fuel expenses when travelling with a passenger
If you're travelling with a passenger, you can claim an extra 5p per mile. However, this only applies if the passenger is also an employee and travelling for business.
To claim fuel expenses for business travel, you must keep a record of all your travel expenses, including fuel and mileage. You can use specialist mileage-tracking tools to make this easier. You'll also need to keep receipts for fuel purchases, and records such as invoices for everything you spend on your vehicle. You should keep these records for five years in case of an audit.
If you're claiming for a company car, you can use HMRC's advisory fuel rates for business journeys. These are calculated quarterly based on the car's engine size and fuel type. For example, from 1 January 2025, the advisory fuel rate for petrol cars is 13 pence per mile for engines up to 1400cc, 16 pence per mile for engines from 1401 to 2000cc, and 24 pence per mile for engines over 2000cc.
If you're self-employed or a sole trader, you can claim a deduction for work-related car expenses on your annual tax return. There are a few methods for calculating this, including the ATO cents per km rate, the logbook method, and the actual expense method. The simplest is the cents per km rate, where you keep track of the kilometres you drive and multiply them by the corresponding rate. With the logbook method, you can claim without an upper limit in kilometres, but it requires more work. The actual expense method also requires you to keep track of all kilometres driven and receipts related to your car expenses.
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Calculating your mileage expenses
If you use your own vehicle for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle, including fuel and electricity.
HMRC allows you to make claims for every mile you drive, provided the journey is for work purposes. The mileage allowance relief claim is based on HMRC's approved mileage rates. The 2025/26 HMRC rates are: 45p for cars and vans for the first 10,000 miles. After 10,000 miles, the rate changes to 25p per mile. If you take a passenger with you on a journey, you can claim an extra 5p per mile. This requires the passenger to also be an employee and for them to be travelling for business.
To calculate your mileage expenses, you need to multiply your work-related mileage throughout the tax year with the applicable HMRC mileage rate. For example, if you drive 5,000 miles for work purposes, you can multiply this by the HMRC rate of 45p to get a total of £2,250.
If your employer reimburses some of the money, you can claim relief on the difference. You can claim tax relief for the unused balance of the approved amount. If your employer does not reimburse you at all, you can claim tax relief from HMRC up to the maximum allowed under the AMAP rates. You will need to keep records of your business trips throughout the year, including the total amount of mileage allowance you have received from your employer.
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Frequently asked questions
If you use your own vehicle for work, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle, including fuel and electricity. The mileage allowance relief claim is based on HMRC’s approved mileage rates. For the 2025/26 tax year, the rate is 45p for the first 10,000 miles and 25p per mile thereafter.
If your employer does not reimburse your fuel expenses, you may be able to claim a deduction from your income. You will only be able to claim tax back if you are a taxpayer. You can use HMRC's advisory fuel rates for business journeys made using your own vehicle.
If you use a company vehicle for work, you can claim tax relief on fuel expenses for business trips. You can claim the difference if your employer reimburses some of the money. You should keep a log of business travel, including dates, destination, purpose of trip, and total miles covered.
To calculate your fuel expense reimbursement, multiply your work-related mileage throughout the tax year by the applicable HMRC mileage rate. You can use a mileage tax relief calculator to estimate your reimbursement.
If you have multiple jobs with different, unconnected employers, you can have a 10,000-mile limit for each job. If your employers are connected, you have a single 10,000-mile limit to divide between all affected jobs.
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