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HMRC internal manual

Employment Income Manual

The general rule for employees’ expenses: expenses that are deductible where some or all of the duties are performed outside the UK: 2002/03 onwards: use of own vehicle or bicycle

Section 232 ITEPA 2003For 2002/03 onwards employees using their own vehicle or bicycle for business journeys are not permitted relief under Sections 336 to 340 ITEPA 2003 for the actual cost of those journeys. Instead they are entitled to a fixed statutory rate of mileage allowance relief to the extent that any reimbursement they receive falls short of the statutory rate, see

EIM31330 onwards.

Section 232 ITEPA 2003 determines the amount of mileage allowance relief that can be deducted from income charged on receipt and on remittance. It does not follow the scheme for other expenses because it provides for a deduction for a notional rather than an actual expense and so it is not possible to determine out of which earnings it was met. Instead there is a simplified scheme.

To determine the amount of the deduction follow these steps:
* first, compute the total mileage allowance relief that would be due for the employment if the earnings of the employment were all chargeable on receipt, * second, deduct the mileage allowance relief from the earnings actually charged on receipt, * third, if any relief is left over deduct it from the earnings charged on remittance that are chargeable for that year * fourth, if any relief is left over it can be deducted from any earnings charged on remittance in future years.A deduction can only be given once in respect of the same mileage allowance relief.

This is illustrated by example EIM31761.