Employees of your company can claim mileage allowance, based on the number of business miles travelled, at the maximum HMRC rate for the year in question.

A company is not entitled to pay the running expenses of vehicles it does not own, i.e. employee-owned vehicles. Instead employees should claim mileage allowance, based on the number of business miles travelled, at the maximum HMRC rate for the year in question.

HMRC’s published mileage allowance rates cover all the expenses of motoring (fuel, insurance, road fund licence, servicing and repairs) plus an element for depreciation. You do not have to supply VAT invoices to support your claim for mileage allowance and you therefore do not need to ask for VAT receipts when buying fuel.

If you have a company car there is a separate scale of reduced mileage allowances. We would recommend that you pay for all of the fuel and claim the relevant reduced mileage allowance.

You should keep a record of the business mileage covered each day, and what mileage if any is to be charged to clients. If your contract allows you to claim mileage, you should agree the rate with your client in advance. Most clients will accept being charged the maximum HMRC rate, although your company may of course charge a higher rate to your client if that is agreed.

HMRC could challenge the total amount of mileage allowance that you have claimed from your company. It is important, therefore, to take regular mileage readings and ensure that the split between business and private mileage is reasonable in view of holidays, school runs and general social use. It is helpful to record the basis of the split.