Mileage allowance and tax relief

HMRC sets approved mileage allowance payment (AMAP) rates per business mile for anyone using their own car, van, motorbike or bicycle for work journeys. An employer paying up to those rates pays tax-free. If it pays less, you can claim tax relief on the difference, called mileage allowance relief. If it pays more, the excess is taxable. Commuting to your normal workplace never counts. The current AMAP rates are published on gov.uk, with a higher rate for the first block of business miles in a tax year and a lower rate after that.

What counts as a business journey

Business travel means journeys made in the course of your job. In the public sector that typically includes:

• community nurses, health visitors and midwives visiting patients at home
• social workers visiting families, schools and courts
• staff moving between hospital sites, schools or council offices during the day
• trips to a training course or meeting away from your normal workplace
• travel to a temporary workplace, generally one you expect to attend for a limited period

Ordinary commuting between home and your permanent workplace is not business travel, even if you are called in for an extra shift or on call. A journey that mixes the two, such as driving from home straight to a patient’s house, may not count in full where it replaces your normal commute. HMRC’s guidance on travel explains how to work this out. Our page on the district nurse role describes the kind of work that racks up a lot of business miles.

How employers pay mileage

Public sector employers pay mileage in different ways:

• NHS employers in England and Wales use the Agenda for Change mileage rates set out in the NHS Terms and Conditions Handbook
• councils and schools usually have their own local rates, often linked to HMRC’s AMAP rates
• some staff receive a lump-sum essential car user allowance as well as a per-mile rate; see our guide to the essential car user allowance

The per-mile rate can sit above or below HMRC’s approved rate. A lump-sum car allowance is taxed as pay, because it is not a payment for specific miles.

When the employer pays less than AMAP

If your employer pays a per-mile rate below HMRC’s approved amount, or nothing, you can claim tax relief on the gap. The steps are:

1. Add up your business miles for the tax year.
2. Work out the approved amount using the AMAP rates for that year.
3. Take away what your employer actually paid for those miles.
4. The difference is the amount you can claim relief on.

What you get back is the tax on that difference. Say, for a hypothetical year, the approved amount for your business miles comes to £800 more than your employer paid. A basic rate taxpayer would get £160 back (20 per cent of £800), and a higher rate taxpayer £320. In Scotland the saving is at your Scottish rate.

When the employer pays more than AMAP

Where your employer’s rate is higher than the approved rate, the extra above the AMAP amount is taxable. Your employer normally deals with this through payroll or by reporting it to HMRC, and it may show on a P11D. Our guide to P45, P60 and P11D explains what a P11D shows.

Passenger payments and other vehicles

HMRC also sets approved rates for motorcycles and bicycles, and a rate employers can pay tax-free for each colleague carried as a passenger on a business trip. Unlike the car rate, the passenger rate gives you no tax relief to claim if your employer does not pay it. All these rates are on the same gov.uk page.

AMAP does not apply to a company car or a lease car from a salary sacrifice scheme. Fuel for business miles in a company car is reimbursed at HMRC’s advisory fuel rates, which are also on gov.uk and change more often.

How to claim

Keep a log of each business journey with the date, start and end points, purpose and miles. Many employers’ expense systems already record this, and you can export it.

You can claim online through gov.uk, by post, or on your Self Assessment return if you file one. For the current year, relief usually comes through a change to your tax code. For past years, HMRC pays a refund. Claims for earlier years can be made within HMRC’s time limits, which gov.uk sets out.

Mileage relief often sits alongside other job expenses. If you also wash your own uniform or pay registration fees yourself, the claims can be made together; see uniform tax relief and the professional fees guide. Social workers, who often drive a lot, may want the children’s social worker profile for how travel is handled in the job. If you dispute what your employer pays per mile, start with payroll or HR and your union.