Are you an employee and being underpaid for business mileage?
30th December 2014
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If you drive regularly on company business, you may have heard that H M Revenue and Customs have approved mileage rates based on the annual miles driven in a tax year. These are 45p per mile for the first 10,000 business miles and then 25p per mile thereafter.


Unfortunately, there is no legal requirement for employers to pay mileage at these rates and therefore any mileage expenses paid to an employee is at the employer’s discretion.


If your employer pays you less than the rates mentioned above for using your own vehicle for business use, it is possible to make a claim to H M Revenue & Customs to receive tax relief on any difference between the approved rates for the mileage driven and the amount you actually received from your employer.


It should be noted that if the amount you receive from your employer were to increase and then be in excess of the approved rates you may then be liable to pay tax on the difference.


Claims of up to £2,500 can be made to H M Revenue & Customs using Form P87 which is available on their website.


The only information you will need to complete the form is your own National Insurance number, your employer’s PAYE reference (which they should provide to you on request), details of the business mileage you have driven and the amount you have been paid for this from your employer.


Subsequent to the first years claim, you will be able to request the relief by phone and the tax relief will be received through your salary as an adjustment to your PAYE tax code.


If you calculate that the claim will be for more than £2,500 you will need to complete a self-assessment tax return for which you will need to register for self-assessment with H M Revenue & Customs and may feel it beneficial to seek advice from a tax professional.


Finally it is worth noting that the approved mileage rates for motorcycles and bicycles are lower than the rates for cars being 24p per mile and 20p per mile respectively.


For further advice on this subject and any other area of accountancy or taxation, please contact Sam Carter from our Hastings office on 01424 720222 or email or Louise Franklin from our Bexhill office on 01424 730300 or email

About the Author

Louise F

Member since: 25th November 2014

I work for Ashdown Hurrey, where I qualified as a chartered certified accountant in February 2014.

I joined the practice after completing my degree in accounting and finance at Manchester Metropolitan...

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