If you own or run your own business or looking to start your own company, you may be eligible for tax relief on business mileage expenses. This includes any mileage that you carry out as part of your job as an employee or self-employed person. For example, if you are employed but do some work from home, then any mileage covered by the company car is taxable. The same applies if you are running a limited company and working at home part time without being paid as an employee or the use of a car falls within the definition of ‘business’ under UK legislation
As a sole trader and self-employed individual, you can claim tax benefits for the use of your vehicle for work by filling in a specific claim form. The form is available on HMRC website and is free to fill out.
If you use your own vehicle for work, you can claim tax relief as per the approved mileage rate.
The tax relief covers;
- The cost of owning your vehicle.
- The cost of running your vehicle
The tax relief cannot be claimed separately for things like
- Road tax
- Fuel
- Vehicle repairs
- MOTs
With the introduction of tax relief for travel costs, employers are able to make their employees more productive. However certain conditions must be met if you want to enjoy tax relief for using your own vehicle for work in the United Kingdom.
The tax relief cannot be claimed for normal commute like travelling from your home to your workplace every day. However if you are on a business trip and you have to travel from your accommodation to a business meeting or your workplace then you can get tax relief. Business travel like travelling from office to meet the customers, travelling to other sites of your company for company business, or commute any other way for your company and for work are all eligible for tax relief.
How Can I Get Tax Relief for Using My Own Vehicle for Business Travel
There is a maximum limit to how much tax free mileage allowance you can get on your own personal vehicle that is being use for business travel. Your employer has to reimburse or pay you the amount of the tax. However if the employer pays less than the approved maximum amount per business mile then you can apply for tax relief. This claim will be for the remaining balance of the approved amount per business mile. If your employer pays you more than the approved amount then that amount is liable for tax. It should also be noted that the tax relief rates are different for different types of vehicles, i.e. motorbikes, bicycles, cars and vans.
In order to claim tax relief you need to keep record of all your travelling information. You need to record the mileage allowance paid to you by your employer and you should also note down your business miles.