One of the key considerations when taking out a car lease is mileage; the payments are based on a fixed annual mileage allowance. Exceeding this annual allowance will result in an excess mileage charge at the end of your lease agreement, which varies depending on the vehicle, model and manufacturer. Our handy guide breaks down yearly mileages and excess mileage charges to help you keep on top of your leasing costs.

How can I work out my annual allowance?

The total cost of your lease is determined by several factors; the value of the car, the estimated residual value at the end of the agreement, your annual mileage allowance, and the length of your lease. The mileage allowance you choose directly impacts your monthly payments, so it’s important to choose an amount that reflects your driving habits as accurately as possible. To work out your annual mileage, start with calculating the mileage associated with the fixed trips you’re likely to cover over the length of the agreement. If you’re a delivery driver who commutes 20 miles each way five days a week, that equates to around 10,000 miles per year.

For every mile driven for business purposes, there may be another mile you need to cover in your personal time. Take into account any other long journeys you’re likely to make – whether it’s travelling home for the holidays or across the country for an annual business conference. If you are confident that your driving habits will remain the same as previous years, the difference between the mileage recorded on your recent MOTs can give you a rough idea of the annual allowance you’re likely to need.

Your annual mileage limit will be agreed between you and the hire company before you take out the contract. At AMT Auto, the mileage bands can be from 5,000 up to 50,000 miles, depending on the funder.

How much are excess mileage charges?

The price you will pay when you go over the agreed mileage limit will be outlined in your original quotation, lease contract and official finance document. Any excess mileage is charged in pence per mile – for example, if the excess was 5p per mile, then you’d be charged £50 for going 1,000 miles over contract.

Typical mileage charges are around 10p per mile, although some car leasing companies can charge as little as 5p per mile and others more than 30p. It’s important to double check the excess charges before setting your mileage allowance – the higher the excess charges, the more sensible it is to go for a higher-mileage contract.

It’s not recommended to go for a lower mileage allowance to reduce monthly payments, however, as the excess mileage charges will soon add up.

Is VAT included in my annual allowance?

This depends on the hire company. While most companies display figures including VAT, others may show the charge before VAT and mark it with asterisks. If that’s the case, you need to add 20% to the quoted figure to reveal the full amount you’ll be charged for going over the mileage allowance. You should clarify exactly what the fees are in black and white before agreeing to the contract.

Not all companies are transparent about excess charges, but at AMT Auto, our charges are clearly outlined in your contract and the official finance document. Our pence per mile costs exclude VAT for business leasing, while our personal leasing contracts include VAT. This is because businesses don’t pay VAT on leasing contracts.

Can I renegotiate my mileage allowance?

If you know you’re going to go over your agreed allowance, you should contact your hire company well before the end of the contract to increase your mileage limit. It’s important to remember that your mileage allowance can be divided across the contract period to suit your requirements, as it’s the mileage at the end of the contract that counts, not at the end of each year. For example, if your allowance is 30,000 miles over three years, you can drive 12,000 miles one year, 10,000 the next and 8,000 miles during the final year.

If you’re looking for a new lease vehicle, contact our dedicated team today to discuss your annual mileage requirements.

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AMT Specialist Cars Limited T/A AMT Auto is an appointed representative of ITC Compliance Limited which is authorised and regulated by the Financial Conduct Authority (their registration number is 313486). Permitted activities include acting as a credit broker not a lender. Registered in England and Wales No: 08403661 | VAT Registration Number: 159095186 | ICO Registration Number: ZB212276.

We can introduce you to a limited number of finance providers. We charge a £239.99 arrangement fee for our Consumer Credit services. We typically receive a payment(s) or other benefits from finance providers should you decide to enter into an agreement with them, typically either a fixed fee or a fixed percentage of the amount you borrow. The payment we receive may vary between finance providers and product types. The payment received does not impact the finance rate offered.

AMT Vehicle Rental Ltd is authorised and regulated by the Financial Conduct Authority: FRN724010. BVRLA Membership No: 1559 | Registered in England and Wales No: 03713753 | VAT Registration Number: GB721712857 | ICO Registration Number: ZA120651. All companies are subsidiaries of AMT Global Investments Ltd - Registered in England and Wales No: 05904790.

Please note: Whilst every effort has been made to ensure the accuracy of the vehicle information and images, some errors may occur. It is important that you do not rely solely on the information, images or prices shown but confirm with AMT regarding any items that may affect your decision to rent, lease or buy a vehicle. All finance applications are subject to status, terms and conditions apply, UK residents only, 18’s or over, guarantees may be required. Registered Address: AMT House, 174 Armley Road, Leeds, LS12 2QH, Tel: 0113 387 4240.

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