Tax & Accounting News
Private car use for business purposes
21/07/2011
As of 6 April 2011, the standard mileage allowance set by HMRC rose from 40p a mile for the first 10,000 miles travelled to 45p in response to escalating fuel prices. Consequently, anyone still claiming at the old rate is entitled to reclaim the 5p a mile from the above date.
Claims can either be made via an employer, if they paid the full 40p a mile, or via the individual’s own tax return for the difference. So, if an employer paid 30p a mile, the claimant should apply for a rebate of 15p a mile for the number of miles travelled since 6 April up to the first 10,000 miles. If the full 40p was paid, the 5p per mile should be reclaimed.
The approved mileage allowance payment (AMAP) applies only to privately owned vehicle used on business. Business use is defined as any journey which the person would not normally make except for business purposes. Generally speaking, travel to and from a place of work is not deemed to be business mileage.
It would be wise to note that HMRC has the right to see any records in relation to business mileage, so claimants should keep a note of business mileage incurred, such as fuel receipts, dates of travel, exact mileage and people or places visited. If the evidence is not satisfactory, the allowances paid could be taxed.
Claimants should note that they must count business mileage in all vehicles of the same type together during the tax year. So if an employee has changed their car or van since 6 April, they do not start a new 'first 10,000 miles'.
After the first 10,000 miles, the allowance drops to 25p a mile and that rate remains unchanged.
