As a business owner, you may be wondering if you can claim mileage as a tax deduction.
The answer is yes- but there are a few things you need to know first.
In this blog post, we will discuss the basics of claiming mileage as a business owner. We will cover when you can claim mileage, how to claim it as a sole trader, and how to claim it as a limited company director.
When it comes to claiming mileage and driving for business, there are two different types of expenses: business travel and commuting.
Business travel includes any trips that you take for business purposes, such as meeting with clients or attending conferences.
Commuting includes any trips that you take between your home and your place of work. In most cases, you can only claim mileage for business travel - not commuting.
Cars & Vans
HMRC advise that you can claim the mileage for 45p per mile for up to 10,000 miles annually for business purposes. Thereafter you can claim 24p per mile
The rate for motorcycles is 24p per mile for business purposes.
The rate for cycling is 20p per mile
Sole traders claiming mileage
If you are a sole trader, you can claim mileage by keeping track of all of your business travel expenses.
You will need to keep records of your travel dates, destinations, and the purpose of your trips.
You should also keep track of how many miles you travelled.
When it comes time to file your personal tax return, the summary mileage calculation amount is entered into the submission to achieve the tax deduction.
If you ever have a personal tax return investigation you will be required to provide the mileage records to HMRC.
Limited company directors claiming mileage
As a director of a limited company you are typically also an employee.
As an employee therefore, you need to keep track of the mileage you travel for business purposes.
You can submit a mileage claim to your limited company and have the money paid back to yourself by way of a bank transfer (in the same way you would submit an expense claim if you worked in corporate). This amount then also gets shown in the business corporation tax return and is a deduction for corporation tax purposes.
Your UK mileage claim method and amount depends of whether you are a sole trader or director of a limited company, as well as the method of travel (car, bike etc). Make sure you claim what you are due, to ensure you are tax efficient.