HMRC Mileage Allowance Rates in 2024

Many people find business travel to be one of the highlights of their job. It provides the opportunity to explore new locations, build relationships with colleagues, and advance career goals while also strengthening business partnerships. Overall, it can be both fun and motivating.

Surprisingly, around 56% of the UK drivers are unfamiliar with HMRC regulations regarding business mileage reimbursement. The following factor can be risky, as each failure to keep or to preserve adequate records can result in an accusation of mileage fraud with a penalty of up to £3,000 per wrong record.

In this blog, we will help you to understand the rules of HMRC mileage allowance and provide you with the latest 2024 HMRC mileage rates for business mileage reimbursement in the United Kingdom. Furthermore, we will tell you about some of the most effective solutions for corporate mileage allowance management.

What is Mileage Allowance?

The HMRC mileage allowance is a regulation that allows employees who use their vehicles to be reimbursed for expenses incurred during business trips. The HMRC offers mileage rates based on driven distance and vehicle type.

The reason behind mileage allowances is simple. HMRC created a system to compensate employees for business travel expenses, acknowledging that personal vehicles are frequently used for work-related purposes while business travel expenses are generally tax-free.

The expenses within T&E management include fuel costs, maintenance, repairs, and general wear and tear that differentiate for every used vehicle. Therefore, HMRC has implemented the Mileage Allowance Payments (MAPs) system that uses a fixed rate per mile, allowing companies to estimate employee expenses easily.

Mileage Rates for Cars, Motorcycles and Bicycles in 2024

HMRC’s Mileage Allowance Payments (MAPs) offer a way to compensate your employees for using their vehicles on business-related journeys. These payments are exempt from annual reporting to HMRC up to a specified approved amount.

Notably, even though MAPs are designed to compensate for vehicle-related costs such as wear and tear, insurance, and road tolls, they do not include parking fees or VAT, which can be claimed separately.

To calculate the ‘approved amount’, multiply your employee’s yearly business miles by the applicable rate per mile for the vehicle. This calculation contains all vehicles your employee might use throughout the year, eliminating the need for separate accounting.

See the HMRC mileage rates, last updated in January 2024, here: 

HMRC Mileage Rates for Passengers

Workers that travel together can earn an 5p per travelled mile as an additional mileage rate for passengers for work-related trips.

When multiple employees need to travel for a business trip and share transportation, there is no need to inform HMRC or be concerned about National Insurance deductions. However, it is essential to note that there’s no MAR equivalent for these passenger payments. 

Your employees need to consider many details when registering mileage claims to ensure prompt and precise expense reimbursement. Thankfully, automation software remains the most efficient method for managing mileage registration available to your business today.

Which Trips Can Qualify for Mileage Allowance?

Business mileage expenses can qualify for tax relief under several conditions. But, generally, understanding which trips are entitled for tax deduction under HMRC rules is relatively straightforward. The key standard is that the trip must be taken solely for business purposes. 

Business trips that qualify for tax relief

• Travel between your permanent workplace and a temporary location 
• Travel between multiple temporary workplaces 
• Travel from home to another workplace, if your home is your permanent workplace due to job requirements

Work-related trips that do not qualify for tax relief 

• Travel from your home to your permanent workplace
• Personal travel that lacks a clear business purpose, like conferences and trade fairs
• Personal travel that involves one or two work-related stops

But what makes a trip business-oriented? According to HMRC, business trips are considered necessary if they are required for work or if the employee needs to be in a location other than their usual workplace to perform their duties.

Managing Corporate Mileage Allowance

The process of managing business mileage allowances can include a good deal of time-consuming and error-prone tasks. Intelligent expense management software can automate the hassle of manually registering and processing your mileage claims.

Our financial solution – Klippa SpendControl, automates expense management, eliminating the risks of inaccurate and outdated business mileage records. Our AI-powered software lets employees record and submit their expense claims for authorised approval. Acquired data can then be uploaded to one of our many accounting and ERP integration possibilities! 

Use our Google Maps integration to calculate the correct mileage reimbursement by selecting a place of departure and destination. Our solution also lets your employees choose several calendar dates to plan journeys ahead of time.   

Moreover, eliminate manual data entry, swiftly approve expenses and invoices, prevent mileage fraud, ensure faster reimbursements and improve your overall financial management within one dedicated platform. Increase employee satisfaction and ensure compliance with HMRC rules all while saving valuable time and reducing the need for manual labour. 

Klippa SpendControl offers essential features to enhance your expense management:  

• Automated mileage registration with Google Maps integration
• Mobile & web environment with 24/7 access to your data
• Built-in document fraud and duplicate detection with machine learning
• Customised approval management with business rules & authorization flows
• Multi-currency support with exchange currency feature
• Accurate data extraction with our #1 OCR software
• All set accounting and ERP software integrations

Are you looking to simplify your mileage allowance management? Allow our award-winning platform to level up your workflow! Schedule a free demo to see our solution in action, or contact our SpendControl specialists for more details.