Record mileage using a different rate

This article explains how to record mileage travelled in a private car using a rate that is different to the HMRC approved rates.

The mileage rates in FreeAgent, which are for business travel in private cars only, are based on the HMRC approved rates.

FreeAgent also allows for business travel on privately owned motorcycles and bicycles, at their current rates. We use these rates because they maximise the amount of tax relief available to the business without risking any taxable benefit issues.

If you wish to use a different rate, we would recommend working out the mileage manually and entering it as a new out-of-pocket expense using the ‘Motor Expenses’ category, rather than as a mileage claim.

Alternatively, you may want to add a new category to track this, but please be aware that you won't be able to name that category ‘Mileage’, since FreeAgent uses this automatically for mileage in private cars. You could call it something like ‘Mileage at Own Rate’ instead.

Please also be aware that FreeAgent won't then be able to keep track of how many miles have been travelled on business - you would need to keep that record externally in case HMRC ever ask to see it.

If you're entering mileage as an expense like this, remember to adjust the VAT figure too, as you can only claim VAT on the fuel element of mileage. Read more about HMRC’s Advisory Fuel Rates.

If you’re unsure how to calculate the mileage or VAT amount, please speak to your accountant. If you’re not currently working with an accountant, you may wish to find one through FreeAgent CoPilot.