How do I calculate business mileage allowance payments?

Business Mileage Allowance Payments are what you pay your employee for using their own vehicle for business journeys. You don’t have to report these payments to HMRC.

Mileage claims should be supported by an expense claim noting the reason for the travel and the number of business miles. Travel from home to a permanent place of work is not considered to be business mileage. A person can have more than one permanent place of work.

There are additional rules regarding payments made through intermediaries.

To calculate the ‘approved amount’, multiply your employee’s business travel miles by the rate per mile for their vehicle.

Rates per business mile

Type of vehicle First 10,000 miles Above 10,000 miles
Cars and vans 45p 25p
Motorcycles 24p 24p
Bikes 20p 20p

If your employee carries another employee in their own car or van on a business journey, you can pay them passenger payments of up to 5p per mile tax-free.

Ask employees to provide periodic VAT fuel receipts to cover the mileage they are claiming for. This will enable you to reclaim 2.5p of VAT on each mile expensed.

Do you still have questions? Get in touch with our accounts team to find out more about how they can help you.

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