Have you ever wondered if the miles you drive for work could save you money on your taxes? Well, they absolutely can through mileage tax relief. In this guide, we will walk through the ins and outs of this benefit, from understanding what it is to how to claim it and maximize your work mileage tax rebate.
Understanding Mileage Tax Relief
So, what exactly is mileage tax relief? Simply put, it’s a form of tax deduction that you can claim if you use your own vehicle for work purposes. This relief doesn’t cover regular commutes from your home to your normal place of work. However if you’re driving to meet clients, attend meetings or conferences, or travelling between different work locations, these miles can add up to significant savings.
The rates and thresholds for mileage tax relief depend the mode of transport and how many qualifying business miles you clocked up in a tax year. In order to work out how much you can claim in a given tax year, you have to keep a record of your business mileage for each type of vehicle that you used. You then need to multiply the miles by the approved mileage rate (see below). You will further need to deduct any payments that you received from your employer towards your business mileage.
Official mileage tax allowance rates
| 1st 10,000 qualitying miles | Each qualifying mile above 10,000 | |
|---|---|---|
| Motor car and van | 45p | 25p |
| Motorcyle | 24p | 24p |
| Bicycle | 20p | 20p |
Eligibility for Mileage Tax Relief
Whether you’re self-employed or an employee using your personal vehicle for work-related travels, you might be eligible for tax relief on mileage. However, there are some restrictions to be aware of. For instance, the miles driven from your home to your regular place of work usually can’t be claimed. But, if you’re driving from your office to a client’s location, then you can claim those miles.
How to Calculate Mileage Tax Relief
Calculating your potential mileage allowance relief involves keeping diligent records. You’ll need to track the number of miles you drive for work purposes, the dates of your trips, the places you drove to, and the business purpose of your trips.
It might seem a bit tedious, but trust me, it’s worth it when you see the reduction in your tax bill. Remember to avoid common mistakes such as claiming commutes or forgetting to keep proper records.
Steps to Claim Your mileage allowance relief
Now that you’ve got your records and calculations in order, it’s time to claim your mileage tax relief. Here’s the process:
- Prepare your records: Have your mileage log and other related documents at hand.
- Fill in your tax return: If you normally complete a tax return each year, then you’ll usually claim your mileage allowance relief when you file your tax return. Include your total work-related mileage and calculate your relief based on the rates for your type of vehicle.
- Submit by the deadline: Late submissions can lead to penalties, so make sure to submit on time.
If you do not normally submit a tax return then you have to use HMRC online portal to confirm that you are eligible for a claim and to submit your claim. Click here to go to HMRC portal and submit a claim!
Maximizing Your Mileage Tax Relief
If you want to make the most of your work mileage tax rebate, remember every mile counts! It’s easy to overlook short trips, but they add up. Also, consider seeking advice from a professional tax service. They can ensure you’re not missing out on any opportunities to claim relief and that you’re keeping your records correctly.
Conclusion
And there you have it, the ABCs of mileage tax relief. By diligently tracking your work-related travel and effectively claiming your mileage allowance relief, you could significantly reduce your tax bill. So why not start today?
FAQ Section
Q: Can I claim mileage tax relief for my commute? A: Usually, commutes from your home to your regular place of work are not eligible for work mileage tax rebate.
Q: How far back can I claim mileage tax relief? A: If you qualify, you can claim mileage tax relief for the current year and for the past 4 years (if you haven’t already claimed for those past 4 years). If in doubt check with a tax professional or contact HMRC helpline.
For more resources about mileage tax relief, check out this webpage. Here’s to successful tax filing and maximising your mileage allowance relief!