Are tax credits affected by a mileage allowance?
No, assuming the work mileage you do is necessary to the job. For the first 10,000 work miles in the tax year your employer can pay you up to 40p per mile and it is not treated as taxable income. (Over 10,000 miles the rate drops to 25p). In fact, when you fill in your tax credit claim you could deduct the other 5p per mile from your income though it probably isn’t worth the effort for your mileage. If you need to see it in print the link is to the pdf file of the notes which came with the form. The deductions are entered on the working sheet on page 20.
