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What is the mileage allowance?

Anyone who uses their own car for business journeys can claim a tax relief based on the approved mileage rate.  This is designed to not only cover fuel costs, but also the running costs of the vehicle.

This rate is 45p per mile for the first 10,000 miles, then 25p per mile thereafter, and this has remained unchanged for the past 11 years.  It is good to note that you can also claim an additional 5p per mile for carrying a passenger who is also employed by the same company.

How much does fuel cost and will it rise further?

According to the RAC Automotive Services Company website, the latest average UK fuel prices compared to before lockdown 2020 are as follows:

Is the 45p per mile allowance enough?

This will depend on the car you drive, the age of the car, how you drive it and the cost of the fuel you pay.

If we base an example on a car with unleaded fuel, who achieves 35mpg to travel 35 miles it would cost £7.31

So if we look at the fuel element alone of the allowance, at 25p per mile it would be £8.75

So what can you do to help?

If you are concerned that the mileage allowance is not enough to cover your costs, speak with your employer about your options.  Perhaps they may be able to offer you a company car or increase the rate per mile they pay you.  There are other implications with this to consider, being any additional amounts over the government allowance above, would be classed as a benefit in kind and will need to be reported on a P11D form and subject to Class 1a National Insurance.

Other things you can consider:

Is it more feasible to travel by train or bus?

Is the journey necessary?

Is your car regularly maintained?

Could you use cruise control?

Could you drive slower? Research shows driving 5mph slower can reduce your cars fuel consumption

Is there a lower cost of fuel available at another petrol station?

Have you got the best car Insurance deal possible?

Do you need any advice relating to this article?  Our experts are here and happy to help. Call or visit one of our offices in Dalston, Dumfries, Penrith or Workington today.