A car allowance is taxable income, so if it is usually paid with your salary and tax is deducted then it is totally separate from any mileage allowance that you are paid. It is not paid to cover running costs but usually to compensate you for not having a company vehicle. You can therefore still claim the difference between the 12p and 45p as a taxable allowance (on the first 10000 miles business use) and the difference between 12p and 25p (on the remainder of your business miles -if any). This will be used as an allowance against other taxable income, so your general tax payable will be reduced or you might get a refund at the end of the tax year. If your car allowance is paid without any tax being deducted then you will have to declare it to HMRC and will have to pay back tax on it but you can still claim the extra mileage allowance as an additional expense, so you wont be any worse off.