Milage rates applicable for a private and company car

Pinky_UK

I have received conflicting guidance and would be grateful for advice.

Current situation:

- I get paid a car allowance from my work (in addition to my salary) and this is taxed.

- I use my privately owned car for travel demanded of by my job (I’m not including commuting to my place of work in this).

- It is an electric car

- I get paid the advisory rate per mile (around 7ish p per mile).

I have been told by HMRC that I can claim 45ppm (i.e. their ‘Travel — mileage and fuel rates and allowances’ rate) minus any amount work pays me. This is done via submission of a yearly self-assessment tax form or a P98 if less than £2,500 per year.

Is this all correct?

However, I have also been informed by my work tax advisor that I can claim for milage aligned with the above when I used a company car previously, and that this can go back 4 years.

This bit especially does not seem right, is it?

Isthisforreal99

First part, correct for using your own car. (P87 not P98 btw, typo?)

Second part re company car is nonsense. The 45ppm for using you own car is to cover total running costs of you own vehicle which you won't have with a company car.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6656916/milage-rates-applicable-for-a-private-and-company-car

What qualifications does your "work tax advisor" have 😳

Albermarle

If you have a company car but pay for all fuel yourself, you can claim back the business miles, but not personal ones. That is not 45p a mile though !

The employer can set the rates, but normally the max ones fixed by HMRC are used. Something like 14 p a mile for petrol/diesel ( it changes every now and again when fuel prices change significantly.)

Alternatively if fuel is paid by a company fuel card, you have to pay back personal miles at those rates.

monkey-fingers

https://forums.moneysavingexpert.com/discussion/comment/81901787#Comment_81901787

They don't have a company car.

They get an allowance, so the company pays the HMRC company car rate for fuel. Which most companies do.

You can then claim the difference from HMRC using the form mentioned.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81901949#Comment_81901949

But they had a company car previously and seemed to be getting bad advice about historical mileage claims, so I was just clarifying what the normal procedure is for company cars.

However, I have also been informed by my work tax advisor that I can claim for milage aligned with the above when I used a company car previously, and that this can go back 4 years.

cc123mm456

I agree with the previous comments.

The 45ppm is the HMRC Approved Mileage Rate (AMR), applicable for using your private car for business mileage (excluding commuting). It will never apply to company car mileage.

The HMRC Advisory Fuel Rate (AFR) is the rate that is supposed to be the approximate actual cost of fuel, with multiple rates depending on the fuel type, and if applicable, engine size.

A few clarifications.

• The 45ppm AMR is for the first 10,000 business miles claimed in the tax year, after that it is 25ppm.
• The amount that you can claim as a tax refund is the tax relief on the difference between the company paid rate and the AMR. In your example, when the company pays 7p per mile, you can claim tax relief on 38p per mile. The refund of tax would be at your marginal rate. 20% of the difference if you are a basic rate tax payer, or 40% of the difference if you are a higher rate tax payer.
• The HMRC calculation method of AFR for electric cars was amended from September 2025. The current rates (applicable from 1st March 2026) are:
  • Home charger rate 7ppm
  • Public charger rate 15ppm

Prior to Sep 2025, HMRC only provided one rate, and that was similar to the home charger rate in the new method.

Of course, it is not mandatory for employers to pay the new public charger rate (on the occasions when it would apply), but you could ask whether your employer is aware of this change.

The history of advisory fuel rates is available here: www.gov.uk/guidance/advisory-fuel-rates

Pinky_UK

Thank you all - really appreciate your time in responding - really helpful.

Pinky_UK

I do have another question. Own car / mileage under 10k used for work (not comuniting).

Work pays me c. 7p per mile. However, linked to the HMRC guidance, they could pay up to 45p. They don’t, they say, as I get a car allowance (which I think is fair enough).

as above, I can instead make a claim directly for the difference - but I thought i would get a payment ‘topped up’ from 7p to 45p. Instead I will only see the benefit of either 20 or 40% of this benefit via tax relief.

Is that correct?

LITRG

https://forums.moneysavingexpert.com/discussion/comment/81908628#Comment_81908628

Hi Pinky, we have information about the tax position if the employer pays less than HMRC's approved mileage rate in our guidance on our website:

https://www.litrg.org.uk/working/employment/taxable-employment-income/employment-expenses-using-your-own-car#11

Albermarle

Also 7 p a mile does not even cover the fuel cost.

Really they should be covering the fuel cost for business use, which would typically be about 12/13p a mile.