Company Mileage? How to Claim Fuels Costs

Claiming mileage for travelling you do in your job is a fairly normal thing to do. Most employers choose to pay the full tax free amount per mile to their employees which is 45p per mile. This includes petrol and running costs and doesn’t have to be declared on any forms or dealt with any further by the employee. The employer might be able to claim the VAT back on the fuel element of the mileage but we won’t cover that in this blog.

The 45p could easily be 30p or even 60p per mile- but those levels mean there’s a little more work to be done.

At anything under 45p, the employee is able to put the difference on their tax return as a job expense. This reduces their taxable income and therefore the tax they pay. This means that an employee on a normal salary can expect a refund of tax when their claim goes in.

Anything over 45p paid by the employer will need to be treated as a benefit in kind – this is the method by which HMRC collect extra taxes on what’s effectively untaxed income, even though in this case one might think it’s not income but a generous reimbursement of expenses.

The side effect of claiming the difference (if the employer pays less than 45p per mile) on your tax return is that your reduced income will be seen as exactly that by mortgage lenders for example. So it’s worth considering not making that claim if the pennies matter when it comes to borrowing.

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