From 1st September 2014, the advisory fuel rates for company cars are changing. The rate that you can claim will depend on the fuel type and engine size of your company car.

fuel rates sept 14

These rates do not apply to mileage which has been claimed for business trips made in your personal vehicle, which currently stand at 45p per mile for the first 10,000 miles in a tax year (25p per mile thereafter). You may also claim 24p per mile for the use of a motorcycle and 20p per mile for the use of a bicycle for business travel. In addition you may claim an extra 5p per mile per passenger, if there is a valid business reason for your passenger to accompany you.

Of course, you can reimburse yourself more than the approved amounts, but you will be taxable on the excess over the approved mileage rates.

What is the definition of business travel?

Perhaps it would be easier to start with what does not qualify as business travel! Any ordinary commuting (travel from your home to your ordinary workplace) is not business travel and you cannot reimburse yourself for the mileage on these trips whether you are using a company car or your personal vehicle.

There is a raft of legislation which aims to pinpoint exactly what qualifies as a permanent workplace and a temporary workplace and therefore if a mileage claim for this trip would be allowable for tax purposes or generate a taxable benefit-in-kind. If you are ever in any doubt, get in touch and we can help.

Should I have a Company Car or Claim Mileage on my Personal Car?

A very good question, and unfortunately there is no easy answer to suit everyone! The best method for you will be dependent upon your business and personal tax circumstances, your budget and the amount of business travel you are likely to do in a tax year. You will also need to consider how you have claimed in the past as this may prevent you from changing the way that you claim and whether you are likely to purchase a new vehicle in the not too distant future.

Generally the tax on company cars has been increasing over the last few years and if you run your own company it is generally not tax efficient to have a company car unless you have a very low emission vehicle, but each circumstance needs looking at individually.