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If you’ve ever used your own car or van for business purposes, then you might be wondering ‘how much can I claim per mile?’ Claiming the mileage allowance can be a bit of a head-scratcher.
To make sure you don’t submit your Self Assessment tax return incorrectly, we’ve put together a guide on the mileage allowance and how to claim it.
The Mileage Allowance is a tax-free allowance for self-employed people who use their vehicle for work. You can use it if you drive for business in a car, van, or bike. The exact amount you can claim depends on how much you travel for business. You can claim the Mileage Allowance through your annual Self Assessment tax return.
When to claim for Mileage Allowance depends on if you use your own personal car for business or if you bought your car specifically to be a driver (for example, as an Uber or Hermes driver).
If you purchased your vehicle for the former reason, then it’s in your best interests to claim for a mileage allowance. If you’re the latter, then you might want to claim the actual (and higher) cost of your car instead. Basically, it makes sense to use it if:
You can claim for it when you do your Self Assessment tax return. To claim back your expenses, you must register for Self Assessment with HMRC before the deadline.
You have until the 5th October in any given year to do this. When it comes to actually declaring your expenses, you simply fill in the relevant section on your Self Assessment form.
If you’re self-employed, you can calculate your vehicle expenses using a flat rate for mileage. This is instead of the actual costs of buying and running your vehicle, for example insurance, repairs, servicing, fuel. These are known as simplified expenses.
You can claim one of the following, depending on your situation:
Once you use these flat rates for a vehicle, you must continue to do so as long as you continue to use that vehicle for your business.
If you’re in a full-time job and your employer only reimburses you at 35p per mile, you can claim the additional amount from HMRC. You do this as a deduction from your taxable income through your tax return.
Take a look at our employed and self-employed calculator to work out how much tax you’ll end up paying as a result!
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As a self-employed you have to pay your income tax and national insurance contributions yourself during your annual self assessment. Our calculator helps you quickly assess how much payment is due.
However you may be eligible for a tax refund when:
In your case when you earn £49,000:
You pay no income tax on first £12,500 that you make
You pay £7,300 at basic income tax rate (20%) on the next £36,500