Why accurate business mileage tracking is essential for your fleet

21 May 20257 min read

Accurately monitoring business mileage is crucial for running an efficient, cost-effective and legally compliant fleet.

Keeping precise mileage data has many benefits: it provides a clear picture of the cost of business travel and the distances your vehicles are covering, while also offering insights for strategic business changes, such as electrification.

Accurately recording your drivers’ business and private mileage is also a legal requirement. If your current approach isn’t rigorous enough, you could risk an HMRC investigation.

If HMRC determines that even one of your drivers has been claiming excessive mileage, you could face a demand for unpaid taxes and a penalty of up to £3,000 per driver per year. HMRC can also review records from the past six years, potentially leading to further penalties.

How to record business mileage accurately

Tracking business mileage used to be a time-consuming, fiddly task. It involved asking employees to keep a record of their business and personal miles, then separate them.

Armed only with a calculator, their work diary and a stack of receipts, they had to create a report of the two from which you had to determine personal and business costs, based on mileage rates.

All that has changed now, thanks to technology.

Today, GPS and digital technology provides a far simpler and more accurate way to track mileage, manage and approve expenses, remain compliant and optimise your fleet’s fuel efficiency.

With Allstar MileagePoint, you and your drivers can do this with just a few clicks of a button. Different versions of MileagePoint offer varying amounts of detail and speed of submission, so you can pick the one that suits your needs.

Also, when the full audit and authorisation functionality of MileagePoint is used, you can meet HMRC’s requirements relating to business mileage tracking.

The challenge of accurate mileage reporting

One of the biggest challenges in mileage reporting is clearly separating business and private mileage. If your drivers don’t do this accurately, you could unknowingly end up paying for private mileage, which won’t have allowed employees to pay the tax that’s due. At this point HMRC could step in.

So when you use a fuel card, it’s important employees are able to prove that they have paid for business mileage, split out private mileage, and reconciled the two: usually that means settling what’s due through payroll, by deducting the cost of the fuel for private miles from an employee’s salary.

How do you do this? Well, you could ask drivers to record every journey, where they started and ended up, and whether it was business or private.

Doing this manually is very labour intensive though, and prone to inaccuracy, or even fraud, if the employee makes mistakes, or exaggerates, the length of business journeys. Ask yourself: are you going to check every journey to ensure they’ve accurately reported the distance?

With MileagePoint Pro which uses a 12v GPS device that is plugged in to the vehicle, every journey is recorded, so drivers know the exact length of every trip. Then it’s just a simple case of flagging in the portal or mobile app which were business trips.

It’s time to think about electric too

A new consideration with mileage reporting is using electric vehicles. While a petrol or diesel vehicle is almost always filled at a fuel station, at prices that are roughly similar, electric cars and vans can be charged at home or using public chargers, and the cost can vary wildly.

Our AllCosts reports show the tariffs involved can range from as little as 2p per kWh using domestic power to £1 per kWh in public. Additionally, VAT rates differ - 5% for home electricity and 20% for public charging - which must be accurately calculated for VAT reclaim.

Then there’s HMRC’s Advisory Electric Rate (AER) for EVs, which applies a single pence-per-mile rate despite the wide variations in charging costs. Can you be certain you’re paying the correct amount if mileage reporting is done manually?

Using a charge card to pay for public charging and a system such as Allstar Homecharge for domestic charging, paired with MileagePoint, will ensure every piece of useful data is at your fingertips. Then, using this information, you can choose how to calculate drivers’ private mileage deductions in payroll: the actual cost of charging or an agreed pence-per-mile rate are two approaches.

How Allstar MileagePoint can help

Allstar MileagePoint makes managing business mileage, and rectifying private mileage, almost effortless. It integrates seamlessly with any of our transaction data – whether petrol, diesel, electric charging using public chargers or a charger at home - to give you a complete, accurate view of your fleet’s mileage, fuel and electric usage. These reports are fully HMRC-compliant, too. If you have an Allstar card, and choose to add MileagePoint, you get access to:

Accurate recording of your drivers’ business and private mileage
Confidence that you can reclaim all your business fuel VAT
Zero hassle for your drivers and for you. When combined with our fuel & EV charging cards, your drivers don’t need to keep receipts
Ability to apply a set method of accounting for each driver

Allstar MileagePoint: Ian’s example

Surveyor Ian uses his company car for business journeys, including regular site visits, and also for private use. Using MileagePoint, he can easily log both private and business mileage.

With MileagePoint Pro, the GPS-enabled device is plugged into a 12v socket in his car, and sends him a log of every trip’s start and end points, and overall mileage.

Then, all he has to do is log into his private account on the Allstar MileagePoint portal or mobile app, and in a few minutes can identify which of the journeys were for business. The system automatically sends this data to his line manager, so his fuel payments can be calculated and managed and his private journeys remain locked, for only him to see.