If an employee uses his own car, or van for business purposes, it is normal for his employer to reimburse him for the business mileage driven, by way of a mileage allowance. Where the employee is paid a mileage allowance within certain limits it is not necessary for the employer to include these amounts on form P11D as it is accepted that no taxable benefit arises.

In addition, to encourage car sharing on business trips where one or more passenger is carried, then an additional amount may be claimed in respect of each passenger for whom the travel is also business travel. The full rates for 2019/20 and 2020/21 are as follows:

Reference to the first 10,000 miles is in respect of the relevant employment and is not an over-riding limit. So, if an individual has two or more employments during a particular tax year, the 10,000 mile limit relates to each employment, provided the employers are independent of each other.

Where the employer reimburses the mileage allowance to the employee at a rate less than that shown above the employee may claim the balance as an expense against his taxable income from that employment. This only applies to the mileage element, and relief for passenger miles not reimbursed by the employer cannot be claimed as an expense against taxable income.