The approved mileage rate for using your own car or van for work rose to 55p a mile for the first 10,000 business miles in a tax year from 6 April 2026, the first change since 2011. Miles above 10,000 stay at 25p. An employer can pay up to those rates tax free; if it pays less, you can claim tax relief on the difference, and if it pays more, the excess is taxed as pay. Motorcycles are 24p and bicycles 20p for every mile, and a further 5p a mile can be paid tax free for each colleague carried as a passenger.
The approved rates
| Vehicle | First 10,000 business miles | Above 10,000 miles |
|---|---|---|
| Car or van | 55p | 25p |
| Motorcycle | 24p | 24p |
| Bicycle | 20p | 20p |
| Passenger payment, per passenger | 5p | 5p |
The rates are per tax year, so the 10,000-mile threshold resets each 6 April, and they are the same for petrol, diesel, hybrid and electric vehicles. They cover the whole cost of running the vehicle for work: fuel or charging, insurance, tax, servicing, wear and depreciation. Nothing further can be claimed for those items. The 45p rate applied from 2011/12 to 2025/26, so claims for earlier years use 45p.
What counts as a business mile
Journeys between workplaces, to visit clients or suppliers, and to a temporary workplace where the posting is expected to last under 24 months all count. Ordinary commuting between home and a permanent workplace does not, and neither does a private detour on a work trip. Employees whose home is their base can count journeys from home to client sites. Keep a log of dates, destinations, purpose and miles: HMRC can ask for it, and the claim depends on it.
When the employer pays less than the rate
The gap between the approved amount and what the employer paid is Mileage Allowance Relief, deducted from taxable income, so it is worth 20% of the shortfall to a basic rate taxpayer and 40% to a higher rate taxpayer.
| Business miles | Employer pays | Approved amount | Paid | Shortfall | Tax saved at 20% | at 40% |
|---|---|---|---|---|---|---|
| 5,000 | 45p | £2,750 | £2,250 | £500 | £100 | £200 |
| 8,000 | nothing | £4,400 | £0 | £4,400 | £880 | £1,760 |
| 12,000 | 45p | £6,000 | £5,400 | £600 | £120 | £240 |
| 15,000 | 30p | £6,750 | £4,500 | £2,250 | £450 | £900 |
Many employers still pay the old 45p, which now leaves a 10p shortfall on the first 10,000 miles worth £200 in tax to a higher rate taxpayer driving that far. Claims go on form P87 online where total expenses for the year are under £2,500, or through a Self Assessment return above that, and can be backdated four tax years. No relief is available for passenger payments an employer does not make. The mileage allowance calculator works the approved amount, the shortfall and the relief for any mileage, employer rate and tax band.
When the employer pays more than the rate
Anything above the approved amount is taxable pay and appears on the payslip or the P11D.
| Business miles | Employer pays | Approved amount | Paid | Taxable excess |
|---|---|---|---|---|
| 6,000 | 60p | £3,300 | £3,600 | £300 |
| 20,000 | 55p for every mile | £8,000 | £11,000 | £3,000 |
National Insurance works differently: the 55p rate applies to every business mile for National Insurance with no 10,000-mile threshold, so the second driver has an income tax excess of £3,000 but no National Insurance excess. Employers paying a flat 55p on high mileages therefore create a tax charge for the employee but not a National Insurance one.
Company cars and the self-employed
The approved rates do not apply to company cars. An employee who pays for fuel in a company car is reimbursed at HMRC’s advisory fuel rates instead, which are set quarterly by engine size and fuel type, and the car itself is taxed as a benefit; the company car tax calculator covers that charge. Self-employed people cannot claim Mileage Allowance Relief but can use HMRC’s simplified expenses flat rate in place of actual vehicle costs, which follows the same figures: 55p for the first 10,000 business miles and 25p after for cars and goods vehicles, and 24p for motorcycles. The alternative is the business share of the real costs and capital allowances. Whichever method a vehicle starts on must be kept for as long as it is used in the business.
Is 55p enough
The rate is meant to be an average. A small petrol hatchback doing 45 miles to the gallon costs about 15p a mile in fuel at £1.45 a litre, leaving a wide margin for the fixed costs; a large SUV or a car with heavy depreciation can cost more than 55p a mile in the early years. The fuel cost calculator prices the fuel element for your own car and mileage, and the car cost of ownership calculator sets it against depreciation, insurance and servicing to show the true cost per mile.
Common questions
What is the mileage allowance for 2026/27? 55p a mile for the first 10,000 business miles in a car or van and 25p a mile after that, with 24p for motorcycles and 20p for bicycles at any mileage.
When did the rate change from 45p to 55p? On 6 April 2026. The 45p rate had applied since April 2011 and still applies to claims for tax years up to 2025/26.
My employer pays 45p. Can I claim the difference? Yes. The 10p shortfall on the first 10,000 miles is Mileage Allowance Relief, claimed on form P87 or a tax return, and saves 20% or 40% of the shortfall depending on your tax rate.
Is mileage allowance taxable? Not up to the approved rates. Anything paid above them is taxed as earnings, and for National Insurance the 55p rate applies to all miles.
Does commuting count? No. Travel between home and a permanent workplace is private. Journeys to clients, between sites and to temporary workplaces count.
Do electric cars get the same rate? Yes. The 55p and 25p rates apply to electric cars used for business travel in the same way as petrol or diesel cars.
Information, not financial advice. Rates are the published 2026/27 figures on gov.uk: travel mileage and fuel rates and allowances; worked figures are from the site’s calculator. Check your employer’s expenses policy and your own records before acting on them.