Using your own car or bike for work travel? You may be able to claim tax relief for business mileage.

If you are employed and spend your own money on items needed for your job, you may be eligible to claim tax relief on those expenses. However, you can usually only claim tax relief on items that are exclusively used for work purposes.

For example, you might be able to claim tax relief when using your own vehicle, whether it is a car, van, motorcycle or bicycle, for work-related travel. Generally, travel between home and your regular place of work does not qualify. However, if you travel to a temporary workplace or incur business mileage, tax relief is typically allowed.

Employers often reimburse mileage using a set rate per mile depending on the type of vehicle. HMRC publishes approved mileage rates that apply when employees use their own vehicles for business journeys. If your employer uses these rates, the reimbursement is not treated as a taxable benefit.

If you are reimbursed at a rate below the HMRC approved amount, you can claim tax relief on the difference through Mileage Allowance Relief. For cars, the rate is 45p per mile for the first 10,000 miles and 25p per mile thereafter. The rate is 20p per mile for bicycles and 24p per mile for motorcycles.

Additionally, there is a passenger payment of 5p per mile per colleague if you transport other employees during business journeys in a car or van.

Use your own vehicle for work? You could be entitled to a tax-free mileage allowance. Make sure you are not missing out on HMRC-approved rates.

If you use your own car, van, motorcycle, or bicycle for business journeys, you may be entitled to a tax-free mileage allowance from your employer. This is known as a Mileage Allowance Payment (MAP) and is designed to cover the costs of using a personal vehicle for work-related travel. Many employees routinely claim this allowance when driving their own vehicle to visit clients, travel between temporary work locations, or attend off-site meetings.

It’s important to understand that MAPs do not apply to ordinary commuting, that is, travelling to and from your regular place of work. However, where travel is genuinely work-related and qualifies as a business journey, the allowance can be a valuable tax-free benefit.

Employers typically reimburse employees using HMRC’s approved mileage rates, which are designed to reflect reasonable running costs. These rates are as follows:

• Cars and vans:
  • 45p per mile for the first 10,000 business miles in a tax year
  • 25p per mile for each mile over 10,000
• Motorcycles: 24p per mile
• Bicycles: 20p per mile

Where an employee carries a colleague as a passenger during a business journey, an additional 5p per mile per passenger can be claimed provided the journey is for business purposes. This extra allowance is also tax-free when paid by the employer.

If an employer pays less than the approved HMRC rates (excluding the passenger allowance), you may be able to claim the shortfall from HMRC utilising Mileage Allowance Relief.

Employees using company fuel for private journeys can sidestep a hefty benefit charge by repaying the full private fuel cost to their employer by 6 July 2025. Miss the deadline, and tax becomes unavoidable.

This repayment process is known as "making good," and requires the employee to repay the employer for private fuel no later than 6 July following the end of the tax year. For the 2024–25 tax year, the repayment must be completed by 6 July 2025.

If the repayment is not made by the deadline, the employee becomes liable for the car fuel benefit charge. This charge is calculated based on the vehicle’s CO2 emissions and the car fuel benefit multiplier. The charge applies regardless of the actual amount of private fuel used, making it potentially costly for employees who only use a small amount of fuel for private journeys, such as commuting.

To avoid the tax, the employee must fully repay the employer for all private fuel used during the year, including fuel used to travel to and from work. Accurate record-keeping is essential, as HMRC will only accept that no benefit has arisen if the full cost is repaid by the deadline. In many cases, repaying the private fuel cost can be more financially beneficial than paying the fuel benefit charge.

Use a company car for personal trips? Avoid a hefty tax charge by reimbursing your employer for private fuel by 6 July 2025. It’s called “making good” – and it could save you a chunk in tax if your private mileage is low.

To avoid the car fuel benefit charge, an employee must "make good" the cost of all fuel used for private journeys no later than 6 July following the end of the relevant tax year. This means that the employee needs to reimburse the employer for any private fuel used during the 2024-25 tax year by this deadline to prevent any tax liabilities related to the fuel benefit.

When an employee is provided with fuel for private use in a company car, the default rule is that the employee is required to pay the car fuel benefit charge. This charge is calculated based on the car's CO2 emissions rating and is applied to the car fuel benefit multiplier. This has just increased to £28,200 for 2025-26 (2024-25: £27,800).

However, the car fuel benefit charge can be avoided if the employee repays the employer for all private fuel, a process known as "making good." Private fuel use includes fuel used for commuting to and from work.

By making good, HMRC will accept that no car fuel benefit charge applies, allowing the employee to avoid the income tax charge on private car fuel. Typically, it is more beneficial for an employee to reimburse the employer for the private fuel rather than pay the Income Tax charge, especially if private mileage is low.

If the employee does not demonstrate that they have repaid all fuel costs associated with private journeys (including commuting), the car fuel benefit charge will still apply. Therefore, it is crucial for employees to maintain accurate records of private mileage and ensure that all fuel costs for private use are fully repaid by the deadline to avoid unnecessary tax charges.

Have you set up a suggestion scheme for ideas that could save or earn you money? Employee suggestion schemes can offer up to £5,000 tax-free for valuable input — and even £25 for smaller efforts. A win for innovation and your employee payslip!

An employee suggestion scheme can offer many advantages for businesses, not only in terms of the valuable insights and innovations employees contribute but also through the potential for significant tax-free rewards. These schemes can help businesses save money, drive new business, and foster a culture of continuous improvement, all the while offering employees incentives for their contributions.

HMRC outlines two types of awards that businesses can offer employees under such schemes:

1. Encouragement Awards – These are given for good suggestions or to reward employees for special efforts. Encouragement awards are exempt from both tax and National Insurance contributions up to a limit of £25. Any amount paid above £25 will need to be processed through the payroll and taxed accordingly.
2. Financial Benefit Awards – These are offered for suggestions that have the potential to save or generate money for the business. The financial benefit awards are exempt from tax up to a generous cap of £5,000. The exempt amount is determined by the greater of:
   • 50% of the money you expect the suggestion to save or generate for your business in the year following its implementation.
   • 10% of the money you expect the suggestion to save or generate for your business over the first five years after its implementation.

In addition to these conditions, there are other reasonable criteria that must be met for the payments to be considered tax-free. These criteria are designed to ensure that the awards are made in a structured and transparent manner.