Motorists using their own vehicles for business are being advised to track their mileage more closely to ensure they aren’t overpaying tax. According to personal finance experts, many drivers fail to claim the tax relief available to them, potentially handing over more money to HMRC than necessary. With tax rules allowing motorists to deduct a significant portion of their vehicle-related expenses, it’s crucial to keep accurate records.
In a time when every penny counts, especially for self-employed individuals and those using their cars for work-related tasks, this advice could help drivers reclaim money they are rightfully entitled to. Experts stress that simple steps like using an app to track mileage could make a substantial difference to a driver’s tax bill.
Why Tracking Mileage Is So Important
Motorists using their own vehicles for business purposes, whether it’s meeting clients, picking up materials, or attending work-related events, may be entitled to claim mileage tax relief from HMRC. This relief, which is based on the mileage driven for business purposes, allows drivers to reduce their taxable income.
Kim Sones, a personal finance expert, explained that many drivers overlook this opportunity and end up paying more tax than they need to. “If you’re using your own car for anything business-related like meeting clients, quoting for jobs or picking up materials, and you’re not claiming mileage, you’re overpaying tax,” she said. According to Sones, HMRC allows claimants to receive 45p per mile for the first 10,000 miles of business travel within a tax year, and 25p per mile thereafter.
This can lead to significant savings, especially for those who travel regularly for work. For example, driving 10,000 miles could allow a driver to claim up to £4,500 as a business expense, which could be deducted from their taxable profits. What’s more, this amount can be paid tax-free, meaning it’s essentially an additional, untaxed source of income.
However, Sones points out that not all travel qualifies for this tax relief. Routine commuting between home and a fixed place of work does not count as business mileage, according to HMRC’s guidelines. Only business journeys that fall outside the usual commute, such as trips to client meetings or supply runs, are eligible for tax relief.
Simple Ways to Track and Claim Your Mileage
Tracking mileage doesn’t need to be complicated. Experts recommend keeping a simple mileage log or using a tracking app to log the dates, distances, and purposes of work-related journeys. Apps like Trip Catcher allow drivers to automatically log their trips and generate a record that can be shared with accountants at the end of the year. This ensures that drivers are fully prepared to make their claims.
It’s essential to keep thorough records throughout the year. According to HMRC, drivers must document both the dates and distances of their work journeys in order to calculate the appropriate tax relief. Failure to do so could mean losing out on valuable claims.
Moreover, any amount paid by an employer towards a worker’s vehicle costs, such as a mileage allowance, must be deducted from the total claim. This means that the amount the driver is reimbursed by their employer will reduce the tax relief they are entitled to.
While mileage claims are straightforward, it’s important to note that this tax relief only covers the cost of driving a vehicle for work-related purposes. Separate claims for things like fuel, vehicle repairs, or insurance cannot be made. Drivers should also be aware that the mileage allowance can only be applied to personal cars used for business purposes, not for vehicles owned by a business or employer.
For drivers who regularly use their personal vehicles for work, tracking mileage is an easy and effective way to reduce their tax burden. By keeping an accurate log of business-related journeys and claiming the appropriate tax relief, motorists can reclaim money they’re entitled to without paying excessive tax. As Sones advises: “Track your mileage, claim what’s yours, because you’ve earned it.”
