Claiming Back Your Business Mileage in Your Accounts

Lots of people tell us that claiming back mileage is a waste of time and not really worth the effort. They say it’s time-consuming and that they don’t really do that much driving for the business anyway.

But even as an office-based business owner, there’s potential to claim back £100s if not £1000s each year on business mileage.

How does it work?

Claiming back mileage applies to the mileage you travel in your personal car for business purposes. If you own your own car and you travel to see a client or go to a business conference or show, or even commuting to and from your networking meetings, you’re entitled to claim back that mileage.

How much can you claim?

You can only claim your business mileage and you have to record and prove this when you submit your claim with your accounts. Should HMRC ever want to check, you’ll want this record to hand.

You claim an amount per mile that takes into account the upkeep of the vehicle as well as the fuel you use. So, if you have a really efficient vehicle, then you’ll quickly see that claiming back your mileage can often be tax-efficient way to draw money from your business.

  • You can claim 45p per mile for the first 10,000 miles
  • 25p per mile thereafter.

That’s tax-free income out to you and of course a cost associated to the business that comes off your bottom line.

You simply make a calculation (as we have done below) to work out how much to claim and then pay that amount back to yourself from your business bank account whilst accounting for it in your accounts.

Is it worth the hassle?

Recording your mileage for those business trips and meetings might seem like another boring chore but ‘every little helps’. Those little trips soon add up!

Let’s take David as an example:

David doesn’t drive much, but he runs a monthly seminar, goes to weekly networking meetings, and he sometimes visits clients nearby. He doesn’t feel it’s worth claiming back that little amount… but here’s the maths of David’s ‘pootling around’.

Monthly seminar:
10 miles (20-mile round trip).

Annual claim: £108 (20 miles x 45p x 12 months).

Weekly networking:
Average 15 miles to each meeting (30-mile round trip) twice a week.

Annual claim: £1,296 based on 48 weeks with two 30-mile round trips.

Client meetings:
One or two visits a week, averaged to six a month within 30 miles of his office.

Annual claim: £1,944 based on six visits x 60-mile round trips x 12 months x 45p.

Over the year, David can claim back £3,348 on just those three areas alone!

Not to be sniffed at!

This is a very average mileage claim too. If you take the odd trip to bigger cities or further afield you can soon see how the numbers will add up.

A short 100-mile round trip is worth £45 in claims and with a modern car you’ll spend far less than that in fuel. Over the year this soon adds up and it’s highly recommended that you claim your mileage back for this reason.

How do you record your mileage and claim it?

There are lots of ways to do this and the important thing to remember is that you must be able to prove the mileage was for business. You must record it and it’s best to make a record of the trip, why you went, and who you went to see.

There are many ways to record this information, but here are three ways to help you get started.

Three ways to record your business mileage:

  • Manually record them by writing them down on a document.
  • Create a spreadsheet with the mileage driven and the reason for the trip.
  • Use an app like TripCatcher to record the mileage.

Manually record them

Simply put, you can just keep a record (preferably in the cloud or backed-up on your computer) for the trips you make in your personal car on behalf of the business.

Create a spreadsheet

A better way would be to create a spreadsheet with the dates down one side and then record the reason for the trip, the mileage, and the date along the top. This is likely to be a more reliable source moving forward as tax records become more and more digital.

TripCatcher

We love TripCatcher and so do our clients. Recording your mileage with TripCatcher is really easy. When you set off on your journey, open the app, and you’ll be able to record the journey perfectly. When you leave, start it, and when you arrive, stop it.

Add in a reason for the trip and TripCatcher will store it in your account which is all in the cloud and accessible from anywhere with the login details.

Why not go one step further and integrate your mileage tracker with your accounts package?

TripCatcher integrates with Xero seamlessly and you’ll be able to push through your claims from TripCatcher right into Xero to create a claim that you simply pay and reconcile, giving you a true and real-time digital trail of your mileage and your claim.

TripCatcher + Xero really do save you so much time and help you claim all those little trips that soon add up to a sizeable claim each month.

We recommend that for cash flow and ease your best to review and pay your mileage each month. This gives you an extra deposit of cash and keeps your accounts in a more stable state.

Every little helps…

Mileage claims soon add up. We suspect you’ll be £1000s better off each year even if you only travel a short distance each week.

If you need any more help with claiming back your mileage or any other aspects of your tax returns or accounting then please do contact us today.