What if I use my own car for business purposes?

Can I claim tax relief for using my own car?

One of the most common expenses incurred by an employee is travel for business purposes. This may involve you using your own car or van.

Some employers pay or reimburse mileage expenses when using your own car or van for business travel – this should be on a tax and NIC free basis and you do not have to claim relief.

You are entitled to tax relief for travel costs that you are obliged to incur in order to do your job; if your employer does not pay or reimburse these expenses at all, or fully, you may be able to claim a deduction from your income. You will only be able to claim tax back if you are a taxpayer.

Business travel includes trips such as travel from your office or place of work to visit your customers using your own car, motorbike, bicycle or van. It can cover travel from home to a ‘temporary workplace’ and also itinerant travel. For example, this may apply if you are a service engineer and move from place to place during the day.

You cannot generally claim tax relief for the expense of ordinary commuting – travel between your home and permanent place of work. If your employer pays or reimburses you for the cost of ordinary commuting (or other private travel), this is like having an additional salary paid to you, and your employer must deduct tax and National Insurance contributions (NIC) from the amount paid to you.

You can read more about which types of journeys you may be able to claim tax relief for on our page What travel expenses can I claim?.

How do I get tax relief if I use my own car for business travel?

If you use your own car or van for business travel, there is the statutory system of tax-free approved mileage allowances available.

The maximum amount per business mile is known as the approved mileage allowance payment (AMAP).

Your employer can pay or reimburse you up to these amounts on a tax- and NIC-free basis. If your employer pays less than these amounts, you can claim tax relief for the unused balance of the approved amount.

These rates also apply where an employee uses his or her own electric or hybrid car for business journeys (so not just to petrol or diesel cars and vans). .

What are the approved mileage allowance payment (AMAP) rates?

The approved mileage allowance payment (AMAP) rates are:

	First 10,000 business miles in the year	Each business mile over 10,000 miles in the tax year
Cars and vans	45p	25p
Motorbikes	24p	24p
Bicycles	20p	20p

If you have more than one job and your employers are not connected with each other, that is, the same people do not control each business, you can have a 10,000 mile limit for each job you hold.

If you have more than one job and your employers are connected with each other, you have only one 10,000 mile limit to be divided between all affected jobs.

The mileage rate covers the costs of running and maintaining the vehicle, such as fuel, oil, servicing, repairs, insurance, vehicle excise duty and MOT. The rate also covers depreciation of the vehicle.

If you are undertaking qualifying business travel in a company car, the rates that your employer can reimburse you up to on a tax/NIC free basis, are different (and depend on the type of fuel). See HMRC’s published advisory fuel rates for further information.

What if I am paid more than or less than the approved (AMAP) rates?

If your employer pays you more than the AMAP rate, this is considered extra wages and you have to pay tax on the excess – see our page How is my tax collected? for more information.

Your employer must also work out whether you have to pay any extra NIC and if you do, they will take this out of your wages via the payroll.

If you are on universal credit, the extra wages where you are paid more than the AMAP rate may impact your award.

If your employer pays you less than the AMAP rate, you can get tax relief against your earnings for the difference, assuming you earn enough to pay income tax. If you are on universal credit, you should be able to take a deduction from your income for benefits purposes. 

This relief is called mileage allowance relief (MAR). To make a claim you need to keep a record of your business miles and any mileage allowance payments made to you by your employer. Note that for MAR, electric and hybrid cars are treated in the same way as petrol and diesel cars.

Example 1

• If you travel 10 business miles and your employer reimburses you nothing, you can claim tax relief on £4.50 (10 miles at 45p). If you normally pay tax at 20%, this means you can get 90p off your tax bill (£4.50 at 20%).
• If you pay tax at the 40% rate, you can get £1.80 off your tax bill (£4.50 at 40%).
• However, if your total earnings are less than the personal allowance and you do not pay any tax, you cannot get any tax relief.

Example 2

• If you travel 50 business miles per day, but your employer only reimburses you for 18 miles per day, you can claim tax relief in respect of 32 miles per day. If your employer reimburses you less than the 45p/25p per mile amounts in respect of the 18 miles, it is also possible to claim additional tax relief for the difference.
• So, say you have travelled 4,160 unreimbursed miles in the tax year (32 miles a day, 5 days a week for six months), the amount of your tax relief claim will be 4,160 x 45p = £1,872. In addition, if you have only been paid 30p per mile (say) towards 18 business miles per day by your employer, you can also claim the difference of £351 (18 miles a day, 5 days a week for six months x 15p). Your total claim will be £2,223. Remember you will not get the full £2,223 back – but instead tax relief on that sum. (If you are a UK basic taxpayer that would be £444.60, being 20% of £2,223.)

Strictly, if you are using a company car, rather than your own car, and your employer does not reimburse you for your business mileage, we understand that you should calculate your mileage costs for a tax relief claim, based on the actual cost rather than the advisory fuel rates, as set out on GOV.UK. Therefore, if a tank of petrol costs you £60 and you travel 50% for business on that tank of petrol, you should claim tax relief on £30, rather than the number of business miles you have done at the relevant rate (for example, 12p, 14p, 20p etc).

What if I take someone with me when on business?

If your employer pays you for taking a passenger, up to 5p per mile may be paid to you on a tax- and NIC-free basis; anything over an allowance of 5p per mile is taxable and NIC-able. The passenger must also be an employee and the journey must be for business.

Unlike AMAP, if your employer pays you less than 5p per mile to carry a passenger, you cannot claim any tax relief on the difference.

How do I work out the tax position on my motoring expenses?

You need to:

1. Work out your business mileage for the tax year;
2. Multiply your business miles by the AMAP rate to give you the total approved payment;
3. Add up the mileage allowance reimbursements (if any) you got in the tax year from your employer;
4. If you had excess mileage allowance reimbursements from your employer you have to pay tax on the extra, or if they were less than the total approved payment you can claim mileage allowance relief.

You can see how both of these things work in the example Ravi and example Jock.

How do I work out any NIC due on my motoring expenses?

You can check to see if any NIC is due, by taking the following steps:

1. Work out your business mileage for the tax year;
2. Multiply your business miles by the AMAP rate to calculate the total approved payment;
3. Add up any mileage allowance reimbursements paid to you by your employer in the tax year;
4. If your employer paid more mileage allowance reimbursements to you than your business mileage at the AMAP rate, you have to pay NIC on the difference. Your employer should make an adjustment in the payroll and collect the NIC due from your wages.

You can see how this works in the example Janice.

What about other business travel expenses?

You may incur other business travel expenses, such as travel fares, meals or overnight accommodation (known as subsistence), parking charges, congestion charges and road tolls.

Provided these relate to allowable business journeys, if your employer pays for any of these directly, or you pay them and get reimbursed, since 6 April 2016, this will not be treated as a taxable benefit on you and so you need take no action.

If your employer does not repay you in full for such business travel expenses, you can deduct the difference from your earnings and claim tax relief.

If you get a round sum travel allowance, in the first instance, you are likely to pay tax and NIC on the allowance, but you can claim tax relief to the extent that you use the allowance for business travel expenses. There are some exceptions:

Personal incidental expenses

• Employees who stay away overnight while travelling on business are entitled to tax and NIC-free reimbursement of up to £5 per night in recognition of their personal incidental expenses. This covers items like private telephone calls, laundry and newspapers. If your employer pays this, tax relief happens automatically and you do not have to claim it. No receipts should be needed by your employer.
• The rules do not permit a deduction for incidental expenses incurred by the employee that are not reimbursed by the employer.

Subsistence expenses

• Provided certain conditions are met, subsistence can be reimbursed by employers by means of a tax and NIC-free scale rate payment rather than on the basis of the actual expenditure incurred by employees in performing their duties. For example, rather than reimbursing an employee £2.59 for a sandwich and £1.99 for a coffee, to keep things simple employers may just pay a round sum amount of £5. Employers are free to come to a specific agreement with HMRC as to the rates. Otherwise HMRC have benchmark scale rates which all employers can use.

You can find out more about these in HMRC’s Employment Income Manual on GOV.UK.

Employers can pay less than the published rates. If an employer pays less than the published rates, employees cannot claim tax relief on the difference between the HMRC published rate and the rate their employer pays, but if they spend more on subsistence expenses than the amount that is reimbursed they can still claim a deduction from HMRC for the difference between what they actually spent on the expense and the amount reimbursed by their employer in the normal manner, subject to their having retained appropriate evidence.

What records should I keep?

For travel in your own car, you should keep a log of business travel to include dates, destination, purpose of trip and how many business miles you travelled – this may involve you setting your mileage counter each journey and keeping a record.

For other business travel costs that you have to pay, you should keep a note of dates and trip details, and keep all receipts, for example, receipts for taxi or train fares, as proof of payments you have made, including credit card statements.

If you do not get a receipt, make a note of who you paid, what you spent and the date.

Note - There is no requirement in law for an employer to reimburse an employee’s mileage or other travel expenses, although many do, as a matter of good practice. Whether or not they do so, will depend on what has been agreed between you – for example as per the employment contract.

Note also, that some employers may not be able to reimburse you (even if they want to) if you cannot provide any records. As you can see from this HMRC guidance employers do not have to vouch every single item of expenditure to reimburse expenses on a tax/NIC free basis, however they do have to have some checking procedures in place. Some employers may feel that they would be exposing themselves to HMRC scrutiny by paying your expenses on a tax/NIC free basis without having checked your spending.

Examples

Ravi: mileage allowance more than AMAP rate

Ravi uses his own car for business travel. In the tax year 2023/24 he travelled 12,000 miles on business. His employer pays him 45p per mile for all business mileage.

• Ravi's business mileage was 12,000 miles
• The AMAP rate for a car for the first 10,000 miles is 45p per mile and 25p per mile after that. Using that rate Ravi would have been paid 10,000 x 45p = £4,500 plus 2,000 x 25p = £500. Total £5,000 (a)
• Ravi was actually paid 45p per mile so his total allowance from his employer was 12,000 x 45p = £5,400 (b)
• The difference between (a) and (b) is £400. Ravi has to pay tax on his profit of £400. It is likely to be reported on a form P11D and then Ravi will pay tax on it by having his PAYE tax code adjusted (or his employer could ‘payroll’ the benefit). Strictly Ravi should also pay NIC on this profit via the payroll. See example Janice below.

Jock: mileage allowance less than AMAP rate – MAR claim

Jock uses his own car for business travel. In the tax year 2023/24 he travelled 6,000 miles on business. His employer pays him 25p per mile for all business mileage.

• Jock's business mileage was 6,000 miles
• The AMAP rate for a car for the first 10,000 miles is 45p per mile. Using that rate Jock would have been paid 6,000 x 45p = £2,700 (a)
• Jock was actually paid 25p per mile so his total allowance from his employer was 6000 x 25p = £1,500 (b)
• The difference between (a) and (b) is £1,200. Jock can claim MAR on £1,200.

If Jock is a UK basic rate taxpayer, this will save him £240 in tax.

Janice: NIC on motor expenses

Janice uses her own car for business travel. In the tax year 2023/24 she travelled 5,000 miles on business. Her employer pays Janice 50p per mile for all business mileage.

• Janice's business mileage was 5,000 miles
• The AMAP rate for a car for the first 10,000 miles is 45p per mile. Using that rate Janice would have been paid 5,000 x 45p = £2,250 (a)
• Janice was actually paid 50p per mile so her total allowance from her employer was 5000 x 50p = £2,500 (b)
• The difference was £250. Janice has to pay tax and NIC on £250. Her employer adds the £250 to her other earnings in the period and collects the NIC (but not tax, unless the employer has chosen to ‘payroll’ the benefit) due on the extra mileage payments she receives (5p per mile), through payroll.

If Janice’s employer only pays her 30p per mile, as that is less than the AMAP rate, Janice does not need to pay any extra tax or NIC: in fact she could claim further tax relief as shown in the example Jock above.

Where can I find more information?

There is more information about tax relief for business mileage on GOV.UK.

You can find more information about tax relief for business travel and subsistence on GOV.UK.

You may find the A to Z list of expenses and benefits on GOV.UK helpful. Although this is aimed at employers, it will also be useful to employees.

You can find more information on how to claim tax relief for travel expenses at How do I claim a refund if I have spent my own money on employment expenses?.

HMRC's Employment Income Manual contains technical details of the MAR system.

The employer guide (which employees may find useful too) (booklet 480) on how to tax mileage payments for employees, can be found here.

Some workers use their own cars for significant business travel and thus incur significant mileage expenses, for example care workers. There may be minimum wage or tax credit/universal credit interactions. You can read about some specific considerations for such workers in our dedicated section on Issues facing paid care workers.