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Getting your correct mileage entitlement

  • Keith gets company car opt-out allowance of £375 per month, less 40% tax and NI, plus 12p per mile
  • But approved the taxman’s mileage allowance rate is 45ppm for first 10,000 miles business use in private car then 25ppm
  • So he can claim tax relief on difference of 33ppm on first 10,000 miles (worth £1,424), then 13ppm on balance (£104) so £1,424 a year in the pocket.

The issue

A Business Car Manager reader, Keith, has written to us with what seems a common issue for company car drivers. We help Keith claim the correct amount of business mileage allowance relief.

The question

Hi, could you advise please?

I can opt out of the company car scheme, for which I get an allowance – £375 per month less tax at 40%. I can then claim a mileage allowance of approximately 12ppm, dependent on the engine and fuel costs,

As I have a fixed allowance am I still allowed to claim relief at 40% on the difference between 12ppm and the Approved Mileage Allowance Payments of 45ppm for the first 10,000 miles and then 25ppm thereafter?

I do approximately 12k per annum business miles.

So my allowance is £225 net x 12 = £2700 plus 12000 x 12ppm = £1440 total, £4140 to run the car for business miles, which is not enough.

Can I claim the difference between 45ppm (25ppm) and the 12ppm variable or is the fixed allowance worked into the calculation in some way?

Or is that “allowance” just considered more salary as it is taxed and subject to National Insurance and not linked to the car expenses.

If I can claim the tax difference between the 12ppm and the 45ppm (25ppm) it adds up to another £1424 PA or £118 PM, so it’s well worth while.


​Colin Tourick, leasing and fleet consultant, responds:

The £375 is treated as additional salary and will be subject to tax and NI in the normal way.

Your employer will then pay you 12p per business mile and this allows you to claim tax relief on the balance through your tax return: 33p up to 10,000 miles and 13p thereafter.

For more see our article ​on What is Mileage Allowance Relief

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  1. An interesting challenge is trying to get HMRC to pay any claim for AMAPs when the figure claimed is an exact round number i.e. £400.
    It seems that even if your monthly calculations are non rounded, if the annual sum results in a rounded figure the HMRC will reject the claim using the reference ‘Rounded Number’ as the reason.
    When speaking to HMRC helpdesk (after three 55 minute plus waits on hold!) the third adviser suggested amending my claim to make it a non rounded figure i.e. £399.45.
    Currently on my third submission to legitimately claim rebate and waiting expectantly!

  2. Can anyone tell me if the company they work for, give a car allowance and allows for a fuel card as well for those who do excessive travel?


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