Mileage tracking is the process of recording the business distances employees drive so they can be accurately reimbursed—covering journey logging, distance calculation, rate application, and HMRC-compliant record keeping. But when you have to manage it across a remote workforce? That’s where most businesses run into trouble.
When employees work across different cities or away from a fixed office, business journeys become harder to monitor. And if your teams still rely on spreadsheets and email chains to handle it, inflated claims, missed VAT reclaims, compliance risks, and delayed repayments are bound to happen. Want to get mileage tracking right? Look no further!
This guide covers everything remote teams need to know about mileage tracking: the compliance basics, where manual processes break down, and how automation removes the admin entirely.
HMRC mileage rules: everything you need to know
Before diving into the practicalities, let’s first look at what HMRC actually requires when it comes to mileage tracking—because getting this wrong can be costly.
Approved mileage allowance payments (AMAPs)
HMRC sets approved rates for reimbursing employees who use their own vehicles for business travel. For the 2026/27 tax year, these are:
- Cars and vans: 45p per mile for the first 10,000 business miles, 25p per mile after that
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
If you reimburse above these rates, the excess is taxable. If you reimburse below them, employees can claim tax relief on the difference. If you need any more information, you can refer to HMRC’s official guidance.
What records does HMRC require for mileage tracking?
To be compliant, every mileage claim should include:
- The date of the journey
- Start and end points (that’s actual addresses, not just towns)
- The purpose of the journey
- The total miles travelled
- The vehicle used
HMRC can request these records during an audit, and incomplete logs can result in disallowed claims and financial penalties. Keeping digital records, that are automatically generated and timestamped, is the safest and most efficient way to stay compliant.
The challenges of mileage tracking for remote teams
Remote and hybrid working has introduced a new layer of complexity to managing mileage. Here are the most common pain points finance teams encounter:
1. Manual processes are prone to error
When employees estimate distances themselves or rely on memory at the end of the month, it’s no shock that the figures aren’t accurate. Some underestimate; others overclaim without meaning to. Either way, your reimbursement data ends up unreliable.
2. Commute distance complications
It is standard practice not to reimburse employees for commuting between home and office. But with remote workers making fewer in-office trips, identifying what counts as a business journey versus a commute becomes more complex. Without automated tools to deduct commute distance from claims, you risk reimbursing journeys that don’t qualify.
3. Cumulative mileage and changing rates
HMRC’s Approved Mileage Allowance Payments (AMAPs) apply a higher rate for the first 10,000 business miles and a lower rate thereafter. Tracking this threshold manually across a growing remote team—especially one spread across different vehicles and fuel types—can create a significant administrative burden on your finance teams.
4. Missed VAT reclaims
Many businesses don’t realise they can reclaim VAT on the fuel portion of mileage expenses. If your business is VAT-registered, you can recover the VAT element of the advisory fuel rate—but only if you have accurate mileage logs and supporting fuel receipts. Without proper records, that VAT goes unclaimed.
How VAT Works on Mileage Expenses
If your business is VAT-registered, you can reclaim the VAT on the fuel element of mileage reimbursements—but only if you have the right records in place.
HMRC publishes advisory fuel rates quarterly, which vary by fuel type and engine size. These rates represent the fuel cost for each mile driven. Because VAT at 20% means one-sixth of the gross fuel cost is VAT, the reclaimable amount is calculated by dividing the total fuel cost by six.
Here are three practical examples:
- Petrol car, 1,400cc: advisory rate 13p per mile: Employee drives 80 miles → fuel cost = £10.40 → VAT reclaimable = £1.73
- Diesel car, 2,000cc: advisory rate 17p per mile: Employee drives 80 miles → fuel cost = £13.60 → VAT reclaimable = £2.27
- Electric vehicle: advisory rate 7p per mile: Strictly speaking, there is no VAT to reclaim on electricity, but HMRC does publish an advisory rate for EVs to simplify reimbursement calculations.
To reclaim this VAT, businesses need to maintain accurate mileage logs and retain fuel receipts as evidence. The VAT on the fuel receipts must cover the amount being claimed, and receipts must be dated before the mileage claim is submitted.
Over a full year, across a remote team making regular business journeys, unclaimed VAT adds up significantly. It is one of the most commonly missed savings in expense management.
What good mileage tracking looks like
Effective mileage tracking isn’t just about recording distances. It also needs to cover submission, review, reimbursement, and reporting. Here is what best practice looks like:
- Employees submit mileage claims on the go, including journey details such as start and end points, passengers, vehicle type, and purpose.
- Distance is calculated automatically—using reliable mapping technology—rather than left to the employee to estimate.
- Commute distance is automatically deducted from any applicable claims.
- The shortest route is enforced to prevent inflated mileage submissions, with manual adjustments flagged and tracked.
- Claims flow through a customised approval workflow before reimbursement is processed.
- Reimbursements are pushed directly to payroll or directly to bank, with no manual data entry.
- Travel logs are stored automatically and are always available for HMRC audit purposes.
What mileage tracking software can do for remote teams
The right mileage tracking software handles the full complexity of mileage management automatically—removing the admin burden from your team and reducing the risk of errors across the board.
Automated, accurate distance calculations
Good mileage software integrates directly with mapping tools to calculate the exact distance between journey start and end points, with no estimation required. Employees can submit claims quickly using postcode lookups, and some platforms, like Capture Expense, even allow journeys to be logged on the go via mobile apps or messaging tools, which is particularly useful for field-based or remote workers.
Automatic commute deductions
The software should also allow employees to set default home and office locations. From that point, any commute distance is automatically calculated and deducted from mileage claims—keeping reimbursements accurate and HMRC-compliant without requiring any manual intervention.
Cumulative mileage tracking across thresholds
Your mileage platform will track how far each employee has travelled over a given period and automatically applies the correct AMAP rate when thresholds are reached. No calculators needed! This is particularly important for year-to-date tracking beyond 10,000 miles and for businesses operating across multiple countries, where different rate structures may apply.
Flexible, customisable mileage rates
Most platforms allow you to use built-in HMRC-approved fuel rates or configure your own. Vehicle records can be set up based on fuel type, engine size, and company policy—and assigned to specific employees or teams. The best solutions support mileage tracking across multiple countries, with rates applied based on location of travel.
Built-in controls to prevent inflated claims
Well-designed mileage software enforces the shortest possible journey by default, reducing the risk of employees overclaiming. Any manual adjustments to routes are tracked and visible to approvers, giving finance teams full visibility without having to chase paper trails.
Fast, seamless reimbursements
Once claims are approved, reimbursements can be pushed directly to payroll or paid straight to an employee’s bank account via integrations with your existing finance tools. No manual data re-entry. No delays. Just happier employees who get timely reimbursements.
Beyond reimbursements: mileage tracking and carbon reporting
Mileage data isn’t just useful for reimbursements. For businesses with sustainability goals—or those subject to UK and EU carbon reporting requirements—every mile your team drives generates data that can feed directly into your environmental reporting.
Software like Capture Expense tracks carbon emissions alongside every business mile, using the trusted DEFRA (Department for Environment, Food & Rural Affairs) methodology. This means your carbon footprint from vehicle travel is calculated automatically at the transaction level, without any additional admin. It also allows you to generate monthly, quarterly, or yearly carbon reports and review emissions data in real time to make smarter, greener decisions about your team’s travel.
With environmental regulations continuing to evolve in both the UK and EU, having this data built into your expense workflow—rather than tracked separately—puts you in the ideal position to make proactive sustainability decisions.
Make mileage tracking work for your team
Mileage tracking is one of those business processes that looks simple on the surface but quickly becomes complex at scale—especially with a remote or hybrid workforce.
The good news is the right software can handle it all automatically, saving your finance team hours of admin, reducing the risk of errors and compliance issues, and making sure that your people are reimbursed accurately and on time.
Capture Expense’s mileage tracker is built to do exactly that. From Google Maps integration and automatic commute deductions to VAT support, carbon reporting, and direct payroll integration—it covers the full picture, so you don’t have to.
Book a demo today to see Capture Expense in action, or explore the vehicle mileage feature in more detail.
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