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HMRC internal manual

Employment Income Manual

Volunteer drivers’ guidance: how much can I receive before I have to pay tax?

HMRC publishes tax free mileage rates which your organisation can pay for mileage which will not give rise to a tax charge provided the limits are not exceeded.

Example

If you drive 5,000 miles and receive more than 45 pence a mile you may have tax to pay. If you drive 5,000 miles and receive 45 pence a mile (or less), then you will have no tax to pay.

This saves you having to keep details of your actual motoring expenses. You will only need to record the number of miles you drive in a tax year for any organisation(s) and the amount of any mileage or other allowances you receive.

If you drive for 2 or more organisations in the year, the 45 pence rate applies to the first 10,000 miles you have driven for all your organisations added together.

You can keep records of actual motoring expenses, and claim your actual volunteer costs if you prefer.

The tax-free mileage allowances are intended to be easy to use and reflect wider environmental aims by encouraging the use of efficient, lower emission vehicles.

The lower rate of tax-free allowance for miles over 10,000 miles in a year reflects the fact that some costs, such as road tax and insurance, do not increase with mileage. The higher the total mileage, the lower the cost per mile of running a car and the greater any profit becomes. The different rates of tax-free allowances above and below 10,000 miles take account of this.