Is your employer paying you less than 45p per mile for business mileage in your personal car?
If the answer to the question is yes, then you will probably be able to claim a tax refund.
Example 1
Under 10,000 miles (per tax year)
If you received 15p per mile from your employer and travelled 5,000 business miles in your personal car (i.e. not a company car) during the tax year, you will have received 5,000 x 15p = £750 in expenses.
However, HMRC's recommended rate of reimbursement is 45p per mile for the first 10,000 miles (and 25p per mile thereafter) and so you are able to claim the difference between the two rates as an expense against your salary.
It effectively reduces your salary by the difference, which in this case would be (45p - 15p) x 5,000 miles = £1,500.
If you were a basic rate tax payer you would be able to claim £1,500 x 20% = £300 back in tax and if you were a higher rate tax payer you would be able to claim £1,500 x 40% = £600 back in tax.
Example 2
Over 10,000 miles (per tax year)
If you received 15p per mile from your employer and travelled 15,000 business miles in your personal car (i.e. not a company car) during the tax year, you will have received 15,000 x 15p = £2,250 in expenses.
However, HMRC's recommended rate of reimbursement is 45p per mile for the first 10,000 miles and 25p per mile thereafter and so you are able to claim the difference between the two rates as an expense against your salary.
It effectively reduces your salary by the difference, which in this case would be (45p - 15p) x 10,000 miles + (25p - 15p) x £5,000 = £3,500
If you were a basic rate tax payer you would be able to claim £3,500 x 20% = £700 back in tax and if you were a higher rate tax payer you would be able to claim £3,500 x 40% = £1,200 back in tax.
What to do next
If you are not registered for self-assessment...
If the difference between the mileage received from your employer and HMRC's recommended reimbursement is less than £2,500 then a claim can be made by simply filling out a P87 Form.
The difference in the example above is £1,500 and so a P87 Form would be the correct course of action.
If the difference is over £2,500, you will need to fill out a self-assessment tax return. In order to register for self assessment you will need to fill out an SA1 form.
Once you have completed the registration form it will take up to 6 weeks to process. You will then receive a letter from HMRC enabling you to submit a Tax Return online.
If you are registered for self-assessment...
You will need to make the mileage claim on your self-assessment tax return. You can also adjust and resubmit a prior year tax return.
If you want to claim for years prior to that then you will need to write to HMRC and include details of your calculations. The address to write to is as follows:-
Self Assessment
HM Revenue & Customs
BX9 1AS
I would also suggest including your national insurance number and/or UTR number (10 digit number found on your self-assessment tax return) on the letter as a reference.