Tax-Free Mileage Expenses: A Guide to Claiming Mileage Allowance in 2024-25

Understanding Tax-Free Mileage Expenses and Mileage Allowance Payments (MAP)

If you use your own vehicle for business journeys you may be able to claim a tax-free allowance from your employer known as a Mileage Allowance Payment or MAP. The allowance is paid when employees use their own car, van, motorcycle or bike for work purposes. It is important to note that this tax-free allowance is not available for journeys to and from work but is available where employees use their own vehicles to undertake other business-related mileage. 

HMRC Approved Mileage Rates for 2024-25: Cars, Bicycles, and Motorcycles

Employers usually make payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates published by HMRC. For cars, the approved mileage allowance payment for the first 10,000 business miles is 45p per mile and 25p per mile for every additional business mile. An equivalent payment of 20p per mile is available for bicycle travel and 24p per mile for motorcycle travel. These rates have been fixed for many years and HMRC has recently confirmed that they will continue to apply for the 2024-25 tax year.

If an employee travels with business colleagues, they can claim an additional 5p per passenger per business mile for each qualifying passenger. Where an employer pays less than the published rates, the employee can make a tax relief claim for the shortfall using Mileage Allowance Relief (MAR). There is no equivalent to MAR for passenger payments, which means if the employer pays less than 5p per mile to carry a passenger, the driver cannot claim any tax relief on the difference.

It is important to note that if employees are paid more than the approved mileage rates then the excess is treated as a BiK. Conversely, if employees are paid less than the published rates then they can make a tax claim for the shortfall using MAR. There is no equivalent to the MAR for passenger payments.