For companies with drivers on the road – whether in sales, delivery, or site-based roles – accurately managing mileage is essential for both budgeting and compliance. One area that often causes confusion is the difference between taxable and personal mileage.
Understanding this distinction isn’t just an accounting detail. It affects how businesses handle expenses, report to HMRC, and manage employee benefits. And when fuel cards are involved, it becomes even more important to get it right.
In this guide, we’ll explain the differences, look at why it matters for businesses, and share some tips on managing fuel spend fairly and accurately.
What is business vs. personal mileage?
Business mileage refers to journeys made only for work purposes. This includes things like:
- Travelling between different work sites or client locations
- Driving to training events, conferences, or supplier meetings
- Delivery or service routes
In contrast, personal mileage covers journeys that are:
- To and from an employee’s normal place of work (commuting)
- Run for personal errands, even if they’re taken during work hours
- Leisure use outside of working time
This is where it gets complicated. Many drivers use the same vehicle for both types of journeys, especially if they’re using a company car or are reimbursed for fuel. Without proper logging, it’s hard to know which mileage is tax-deductible and which isn’t.
Why the distinction matters
HMRC treats business and personal mileage differently for tax purposes. If a company pays for all fuel and does not properly separate personal usage, the fuel benefit charge may apply.
This means employees may owe tax on the perceived benefit of having fuel provided for private use – even if most of their driving is for work.
For employers, failing to keep accurate mileage records can lead to:
- Unexpected tax liabilities during audits
- Fines or penalties if fuel benefit charges aren’t reported correctly
- Difficulty reclaiming VAT on fuel unless mileage is clearly classified
In short, good record-keeping is more than admin, it’s part of staying compliant.
How fuel cards fit In
Fuel cards offer many advantages for businesses: from simplifying expense claims to improving visibility over spend. But they also introduce the need for accurate mileage tracking if employees are using fuel cards for both business and personal journeys.
If an employer offers a fuel card for employees, HMRC requires proof that fuel used for private mileage is repaid by the employee, or else a fuel benefit tax charge will apply.
The most common way to manage this is through:
- Employee contributions (calculated using advisory fuel rates)
- Mileage logs separating business and private journeys
- Clear fuel policy documentation
To stay compliant, you’ll need systems in place that ensure employees aren’t inadvertently receiving an unreported benefit.
Best practices for tracking mileage accurately
1. Use a mileage log or digital app
Encourage employees to record every trip, including date, start/end locations, distance, and purpose. Even basic mileage apps can reduce human error and make reporting easier.
2. Set clear policies
Have a company mileage policy that defines business vs. personal use, explains how records should be kept, and outlines expectations for employees using fuel cards.
3. Require monthly reporting
Rather than waiting for the end of the tax year, get drivers to submit mileage logs monthly. This ensures more accurate tracking and makes VAT reclaim easier too.
4. Use real-time fuel tracking
Fuel card tools that break spend down by vehicle or driver can help flag anomalies, such as a driver spending more than usual or refuelling outside of business hours.
How fuelGenie can help
With fuelGenie, you gain access to real-time data and digital tools that support more accurate reporting:
- Track spend by driver or vehicle
- Export HMRC-compliant invoices
- Monitor fuel use and highlight outliers
- Help drivers and finance teams stay aligned on usage
When paired with clear mileage records, an employee fuel card can simplify tax reporting, improve accuracy, and reduce stress during audits.
Good records = less risk
The line between personal and business mileage may not always be obvious, but the tax implications definitely are. With the right policies, tools, and fuel card setup, your business can stay on the right side of HMRC, reclaim what it’s owed, and avoid paying more than necessary.
By helping employees track mileage clearly and offering visibility over fuel spend, you’ll be in a much stronger position. No guesswork, no grey areas, and no end-of-year panic.
