As an employee, you may well have used your own car for business-related travel and been reimbursed by your employer or HMRC.
When you’re self-employed, or the director of your own limited company, different rules apply. You can still claim back business mileage, but the way you do it, and the records you need to keep, can be a challenge for many new business owners.
This article includes:
Download our Crunch Business Mileage spreadsheet
Crunch Business Mileage spreadsheet 2020/21 →
Who can claim business mileage?
Both company directors and employees can claim. If you hire an employee they would be able to claim from you as their employer. If you don’t pay them business mileage, or you pay them less than the HMRC-approved rates, they can make a claim at the end of the tax year for the difference.
Sole traders are also able to claim mileage, with one important difference. HMRC do not allow business mileage to be claimed by sole traders using a bicycle, which is rather unfortunate for those green-minded among you, or even cycle couriers. However, you may be able to claim the costs of buying a bicycle for work and consumables such as tyres or maintenance. Any personal use of the bicycle is likely to reduce the amount you can claim. It’s best to speak to an accountant or your local tax office to confirm what you can claim.
How much can be claimed as business mileage?
It’s usually best to claim back your mileage using the approved mileage allowance payments (AMAP) set by HMRC. This is 45p per mile up to the first 10,000 miles and then 25p per mile thereafter for car and van travel.
The AMAP rates include the general running costs of your car like maintenance and insurance.
It is important to keep a clear record of all the business journeys you make in your own car as evidence to prove what you have claimed back.
Here are the rates (per mile) allowed by HMRC:
Mode of transport
First 10,000 miles
Over 10,000 miles
*sole traders are not currently able to claim for business mileage by bicycle
What evidence is needed to claim business mileage?
To ensure that your company can reimburse you as a director, or your employees, the following should be kept:
- A log of the date of each journey and location
- The number of business miles driven
How to calculate business mileage costs?
It’s simple – multiply your business mileage by the relevant mileage rate. Just record your mileage regularly and work out how much you can claim. An easy way to record your journeys is on a business mileage claim spreadsheet – ours is free and easy-to-use. Establish a system of regularly submitting a claim form and being paid back your costs from the company account, perhaps on a monthly basis.
An HMRC inspection will involve checking that your entire expense claim system is fit for purpose. This means relevant receipts are retained to support corresponding claims and the amount of money leaving the company accounts matches the amount claimed – so it’s important you keep all relevant records whether it’s for you as the company director or an employee claiming mileage.
My new business hasn’t got any funds to reimburse mileage expenses
It is often the way that, as a brand new business, you’ll have expenses to pay before you’ve earned any money for the company. There are two possible options here regarding business expense claims:
Wait until the business has generated the necessary income and then claim
Introduce your own working capital into your business and then you can pay yourself back. It sounds a bit like robbing Peter to pay Paul but the input of capital shows in the company accounts as a loan from the director to the company.
What if my business is VAT registered?
If your business is VAT registered, then our article on the VAT element of business mileage explains everything you need to know, including a useful spreadsheet to help you calculate the correct amounts.
Crunch clients can claim business mileage effortlessly with Tripcatcher
Whether you’re on the road every day or just make the occasional business trip, it pays to keep track of your mileage – you’ll reduce your tax bill and end up with more money in your pocket.
The good news is that this just got a whole lot easier. All limited companies using Crunch Accounting can now use Tripcatcher to accurately record and monitor their business mileage – at no extra cost. By integrating directly with your Crunch account, Tripcatcher does all the hard work for you.
You can log mileage via the Tripcatcher web app, but there’s also a fantastic mobile app available for iPhones / iPads and Android devices – great for recording mileage on the go.
Cut down on data entry
We think you’ll love Tripcatcher. It includes loads of great time-saving features, including the ability to create recurring trips if you travel between the same location over a set period of time. Simply enter the route and which days you made the journey – Tripcatcher will do the rest.
Claim the correct mileage
Not sure how far you’ve travelled? Simply bash in the ‘to’ and ‘from’ postcodes – Tripcatcher will then work hand-in-hand with Google Maps to plot the route and work out the mileage. If you’re using the mobile app, you can enable GPS tracking to automate the whole process.
Get started today
Can’t wait to get started? Head over to your Crunch account, click on ‘Your Crunch’ and then ‘Crunch Connect’. Under Tripcatcher, select ‘Activate’. You’ll just need to create a password for Tripcatcher (the email you use for Crunch will be pre-populated).
Don’t forget, Tripcatcher is free to all limited companies using Crunch Accounting, so you won’t have to pay a penny extra to use it.