Using your car at work
If you use your own car for business travel you can get tax relief for the costs that your employer does not meet.
If your employer pays you a car or mileage allowance, it forms part of your taxable income. The amount that exceeds your business motoring costs will be taxable. If your business motoring costs exceed the amount paid by your employer, you can claim relief against your earnings for the difference.
You will need to keep a log of your business miles for the tax year (6 April to the following 5 April). The two types of journey that count as business travel for tax relief purposes are:
- those where you have to make the journey in the course of your job (e.g. travelling to clients)
- those you make to or from a place you have to attend to do your job (e.g. travelling direct to a client from home)
You cannot claim relief for ordinary commuting or for private fuel.
Methods of calculation
There are two methods that can be used to calculate tax relief.
The simple method
To use this method you must keep a record of all your business miles for the tax year. Multiply the number of business miles by the authorised HM Revenue & Customs rates.
The exact method
To use this method you must keep records of all your actual motoring costs for the tax year. You must keep a log of your business and private mileage.
Once you have calculated the amount relevant to your business mileage you should compare this with the amount paid by your employer. If your employer has paid you too much you are taxable on the difference. If your employer has not paid you enough then you can claim the difference against your taxable income for the year.
For more information about having a company car, see the HM Revenue & Customs website.
This page was last reviewed on 03 April 2006. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
