I am an employee of a large business and as a sales rep I do a lot of travelling by car. I use my own car and claim mileage back from my employer for all of my travel to client meetings but they don’t pay the full HMRC 45 pence per mile. Are they allowed to pay at a lower rate and if so is there any way for me to claim back the difference?

How to Claim Additional Mileage as an Employee

Some employers choose not to pay the full HMRC tax free mileage rate of 45 pence per mile (based on rates for 15-16); this is a perfectly acceptable policy. Employers may pay any rate they see fit.

In some cases the number of miles travelled on business along with the difference between the rates paid and the official rates can amount to quite a large reclaim.

For example:

In the 2014/15 tax year an employee travelled a total of 9,000 business miles for their employer, who paid mileage at a rate of 25 pence per mile.

In this instance the shortfall amounted to 9,000 miles at 20 pence or £1,800.

As such we would suggest a claim for the shortfall would certainly be worthwhile. As a basic rate tax payer this shortfall would result in a tax rebate (or reduction in your lability) of £360. As a higher rate taxpayer this would increase to £720.

Please note that you must ensure that your travel does qualify as business travel not commuting.

How to claim

There are a couple of main ways to claim this difference back from HMRC.

If you are already required to file a self-assessment tax return then the shortfall can simply be added into the business travel expenses section on the employment pages.

If you do not already file a tax return, and do not wish to, you can complete a P87 from. This form is completed online and printed off and signed before sending to HMRC.