Tax Glossary

Mileage Allowance

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Last updated on:
March 17, 2024

The Mileage Allowance is a provision that enables individuals to claim tax relief for using their own vehicles for work purposes. This allowance is applicable whether you're navigating the roads for business in your car, van, or on a motorcycle or bicycle, and it applies to both self-employed professionals and those employed by a company.

Eligibility for Mileage Allowance

This allowance is designed for those who travel using their own vehicles for business activities. It's important to distinguish between personal vehicle use for business and vehicles purchased specifically for work:

  • Utilizing a personal vehicle for work tasks qualifies you for mileage allowance.
  • Purchasing a vehicle primarily for work purposes (e.g., for use as an Uber driver) might make you eligible for different tax deductions, such as vehicle depreciation or lease payments.

Mileage Allowance Rates

The amount you can claim varies based on the vehicle used and the distance traveled for work:

  • Cars and Vans: 45p per mile for the first 10,000 miles in a tax year, then 25p per mile thereafter.
  • Motorcycles: 24p per mile, with no reduction after 10,000 miles.
  • Bicycles: 20p per mile, also without reduction for distance.

For self-employed individuals not operating through a limited company, simplified expenses might be a preferable option. Use a Mileage Allowance calculator to estimate your potential claim.

Claiming Mileage Allowance

You can claim this allowance on your annual Self Assessment tax return. Make sure to submit your return by 31st January following the end of the tax year in question. For instance, for earnings between 6th April 2023 and 5th April 2024, submit your 2023/2024 tax return by 31st January 2025.

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