This is one of the most regular questions we’re asked by clients: can you claim mileage on a company car? The short answer is yes – but not in the same way as using your own car, and the rules apply differently depending on who pays and what the mileage is for.

Let’s break it down.

Company car vs own car – what’s the difference?

If you use your own car or personal vehicle for business travel, HMRC allows you to claim a mileage allowance using the approved rate (45p per mile for the first 10,000 business miles, then a lower mileage rate after that).

However, when you’re using a company car or company vehicle, you cannot claim the standard car mileage rates. That’s because the employer is already covering all the costs of the vehicle, including insurance, servicing and depreciation – the full cost of ownership is not yours.

Claiming business mileage in a company car

If you’re using a company car for business purposes, you can still claim business mileage, but only for the fuel or electricity used on business journeys – not a flat rate per mile.

There are two common approaches:

1. Employer pays mileage using advisory fuel rates

Many employers reimburse employees using HMRC’s advisory fuel rates, which vary by fuel type, engine size, and whether the car is petrol, diesel, hybrid or electric.

If the employer pays no more than the advisory rates per mile, there is:

• No taxable benefit
• No extra tax or National Insurance

Rates are reviewed on a quarterly basis and are based on manufacturers’ information and average fuel costs, including data from the Automobile Association.

2. You pay fuel yourself and claim tax relief

If you pay fuel costs out of pocket for business trips and your employer does not fully reimburse you, you can claim tax relief on the difference via your tax return or HMRC expenses claim.

This applies to:

• Business travel only
• Actual fuel costs (not private mileage)
• The current tax year and up to four previous years

What about private mileage and fuel benefit?

If your employer pays for private fuel in a company car, this usually creates a fuel benefit – a taxable benefit in kind added to your tax code.

To avoid this, employees often:

• Keep a clear mileage log
• Repay private fuel using advisory rates
• Separate business use from private use

This applies whether you’re driving petrol, diesel cars, hybrid cars or electric cars (electric still counts for business mileage, but at electricity advisory rates).

Special cases: pool cars, car allowance and sole traders

• Pool car: If there’s no private use, mileage claims may not apply in the same way
• Car allowance: This usually means your own vehicle, so approved mileage rates apply
• Sole traders and limited companies: These have different rules again, especially around business expenses and taxable profit

Can you claim mileage? A summary

• ✔ You can claim mileage on a company car
• ✘ But not at the standard per-mile rates
• ✔ Claims are based on fuel used for business travel
• ✔ Good records make all the difference

If you’re unsure what rules apply, or whether your mileage claim is costing you tax unnecessarily, this is exactly the kind of thing we help clients get right.