HMRC Mileage Allowance in 2026: Approved Rates, Advisory Fuel Rates and How to Claim

Whether you pay staff for driving their own cars on business, claim it back yourself from HMRC, or run a company car, the HMRC mileage allowance decides how much can be paid tax-free. In 2026 the headline rate changed for the first time in 15 years: cars and vans now get 55p a mile for the first 10,000 business miles, backdated to 6 April 2026. This guide covers every approved rate, how National Insurance works differently, the advisory fuel rates for company cars, how to claim Mileage Allowance Relief and what to do about mileage paid at the old 45p.

Quick answer

For 2026-27, HMRC's approved mileage rates are 55p a mile for the first 10,000 business miles in a car or van (up from 45p a mile), then 25p a mile. Motorcycles are 24p a mile, bicycles 20p a mile, and you can add 5p a mile per passenger. Payments up to these rates are tax-free; if your employer pays less, you can claim tax relief on the gap.

• The 55p rate was announced on 21 May 2026 and applies from 6 April 2026

• For National Insurance, the higher rate applies to every business mile, not just the first 10,000

• Company car drivers use advisory fuel rates instead, reviewed every quarter

• Commuting to your normal workplace never counts

What the HMRC mileage allowance is

The mileage allowance is a set of approved rates for using your own vehicle on business. HMRC calls the payments employers make Approved Mileage Allowance Payments (AMAPs). If an employer pays up to the approved amount, nothing is taxable and there's nothing to report. If the employer pays more, the excess is taxable pay. If the employer pays less, or nothing at all, the employee can claim tax relief on the shortfall, called Mileage Allowance Relief (MAR).

The approved rates are meant to cover all the running costs of the vehicle: fuel, insurance, servicing, repairs, road tax, depreciation and finance interest. Costs that relate to a specific journey, such as parking, tolls, congestion charges and overnight accommodation, aren't covered by the rate and can be reimbursed separately under the normal expenses rules. Employers aren't legally required to pay mileage at all, and they can choose a lower or higher rate; the approved rates just set the tax-free limit.

The rates apply to an employee's own vehicle, including one they lease or that belongs to a family member. Company cars work differently: the employer already pays for the car, so only fuel is reimbursed, using the advisory fuel rates further down this page.

Approved mileage rates for 2026-27

55p a mile

Cars and vans, first 10,000 miles

Was 45p a mile

25p a mile

Cars and vans, over 10,000 miles

Unchanged

24p a mile

Motorcycles

All miles

20p a mile

Bicycles

All miles

5p a mile

Per passenger

Fellow employees on business

The 2026-27 rates and the move from 45p to 55p

The car and van rate of 45p had been frozen since April 2011, while fuel, insurance and vehicle prices rose sharply. On 21 May 2026 the government announced that the rate for the first 10,000 business miles would rise to 55p a mile, backdated to the start of the 2026-27 tax year on 6 April 2026. The rate for miles over 10,000 stays at 25p a mile, and the rates for motorcycles, bicycles and passengers didn't change. A written ministerial statement confirmed that HMRC will apply the new rate informally until the Income Tax and National Insurance legislation is formally updated.

The 10,000-mile threshold counts all your business miles in a car or van in the tax year with the same employer, across every car you use. If you have two jobs with associated employers, such as two companies in the same group, the miles are added together. Electric and hybrid cars use exactly the same rates as petrol and diesel ones. Electrically assisted pedal bikes use the bicycle rate; other electric bikes and scooters use the motorcycle rate.

The change also applies to the self-employed. Sole traders and partners using simplified expenses can claim 55p a mile for the first 10,000 business miles in a car or goods vehicle, then 25p a mile. If your accounting year doesn't end on 5 April, transitional rules split your miles between the old and new rates; our self-employed tax guide covers simplified expenses in more detail.

What counts as a business mile

Only business travel qualifies. That means journeys you have to make in the course of your job: visiting customers, suppliers or a temporary site, travelling between two workplaces during the working day, or driving to a training course. Ordinary commuting between your home and your permanent workplace doesn't qualify, and nor does private travel, even if you take a work call on the way.

The temporary workplace rule is where most of the value lies. If you go to a site for a limited task or a limited period, it's a temporary workplace and the trip counts. If you expect to work at the same site for more than 24 months, or you spend 40% or more of your working time there over that period, it becomes a permanent workplace and the journey turns into commuting. Field-based staff who have no permanent workplace can usually treat the trip from home to each customer as business travel.

When a journey starts at home and goes to a temporary workplace, you can normally claim the full distance. If it's a detour on the way to your normal workplace, only the extra miles count. Keep it simple and defensible: record the start and end postcode, the purpose and the miles for every trip.

How tax and National Insurance treat mileage payments

The tax rules and National Insurance rules use the same rates but apply them differently. For Income Tax, the approved amount is 55p a mile for the first 10,000 business miles and 25p a mile after that. For National Insurance, the qualifying amount uses the higher rate, 55p a mile, for every business mile, with no step-down after 10,000 miles. This means a payment above 25p for high-mileage drivers can be taxable for Income Tax but still free of National Insurance.

Is this mileage payment taxable?

Step 1

Count business miles (no commuting)

Step 2

Approved amount

55p × first 10,000 + 25p × rest

Step 3

Compare with what the employer paid

Step 4

Paid more?

Excess is taxable — payroll or P11D

Step 5

Paid less?

Employee claims MAR on the gap

If you pay more than the approved amount, the excess is taxable. You can either put it through payroll as taxable pay, or report it on a P11D after the year ends; our P11D guide covers the deadlines. For National Insurance, any excess over the qualifying amount must go through payroll as earnings in the pay period it's paid, and it can't be carried forward to later pay periods. If you pay exactly the approved amount or less, there's nothing to report.

Worked examples for 2026-27

1. Employer pays the approved rate. Sam drives 12,000 business miles in his own car. His employer pays 55p for the first 10,000 and 25p after that: £5,500 + £500 = £6,000, all tax-free and not reported.

2. Employer pays a flat 50p. Leah drives 14,000 business miles and her employer pays 50p a mile for all of them: £7,000. For Income Tax, the approved amount is £5,500 + (4,000 × 25p) = £6,500, so £500 is taxable and goes on her payslip or a P11D. For National Insurance, the qualifying amount is 14,000 × 55p = £7,700, so no NI is due on any of it.

3. Employer pays 35p. Dev drives 8,000 business miles and receives 35p a mile: £2,800. The approved amount is 8,000 × 55p = £4,400, so he can claim Mileage Allowance Relief on £1,600. As a basic-rate taxpayer, that's £320 back from HMRC. As a higher-rate taxpayer it would be £640.

4. Carrying colleagues. On a 300-mile return trip to a client with two colleagues in the car, an employer can also pay 300 × 5p a mile × 2 = £30 tax-free in passenger payments. Unlike the main rate, there's no relief if the employer pays nothing for passengers.

Mileage for limited company directors

If you run your own limited company and use your personal car for business, the company can pay you the approved rates exactly as it would any employee. A director who drives 6,000 business miles in 2026-27 can take £3,300 out of the company tax-free and with no National Insurance, and the company deducts the £3,300 as a business expense for Corporation Tax. That makes mileage one of the most efficient ways to extract money, provided the miles are genuine business journeys and recorded properly.

The alternative, putting the car in the company's name, brings a company car benefit, a P11D and Class 1A National Insurance, which is usually only worth it for low-emission or electric cars. For most directors with petrol or diesel cars, keeping the car personal and claiming the approved rate is simpler and cheaper.

How to claim Mileage Allowance Relief

If your employer paid less than the approved amount, or nothing, you can claim relief from HMRC. Relief isn't a cash payment of the shortfall; it reduces your taxable income by the shortfall, so you get back tax at your highest rate on it.

Claiming Mileage Allowance Relief

1. 1

   Work out your business miles

   Add up every qualifying journey in the tax year from your log. Exclude commuting and private trips.

2. 2

   Calculate the approved amount

   55p a mile for the first 10,000 miles in 2026-27 (45p a mile in earlier years), then 25p a mile.

3. 3

   Deduct what your employer paid

   The difference is your Mileage Allowance Relief. Don't include passenger payments; there's no relief for those.

4. 4

   Claim online, by post or through Self Assessment

   Use HMRC's online service if you don't file a tax return. If you do file Self Assessment, you must claim on the return.

   Claim tax relief for vehicles
5. 5

   Send your mileage log if asked

   HMRC asks for logs showing each journey's reason and start and end postcodes, with a separate log for each job.

You can claim for the current tax year and the four previous years, so in October 2026 you can still go back to 2022-23 (at 45p for those years). HMRC normally adjusts your tax code for current-year claims and sends a repayment for past years. Watch out for claim companies that charge a large share of the refund for something you can do free; our HMRC tax refund guide explains how to claim directly.

Common mistakes with mileage claims

Keep these records for every business trip

0/6

• Date of the journey
• Start and end postcodes
• Purpose: who you visited and why
• Business miles (and odometer readings if you use them)
• Which vehicle you used, and passengers carried
• What your employer paid you for the trip

Share Print

The commonest error is claiming commuting. A second is applying the 55p rate to more than 10,000 miles for tax, which turns part of the payment into taxable pay. A third is counting miles on a temporary workplace that has become permanent because the project has run past 24 months. Employers often forget that paying above the approved rate creates a P11D or payroll entry, and that a flat monthly car allowance is fully taxable pay, not a mileage payment.

For employers, the safest approach is a written mileage policy: the rate you pay, how employees log journeys, who approves claims, and how you check against the 10,000-mile threshold. Use the budget planner to forecast the cost of moving staff to the new 55p rate.

Budget watch

The 55p rate was announced outside a Budget and is being applied informally until legislation catches up. Expect the Budget on 28 October 2026 or the following Finance Bill to put the change formally into law. We'll update this page if anything changes; the advisory fuel rates are next reviewed on 1 December 2026.

Official links

• Travel: mileage and fuel ratesApproved rates 2026-27
• Advisory fuel ratesCompany car fuel, quarterly
• Mileage rules for taxEmployers: approved amount and reporting
• Mileage rules for National InsuranceSingle rate for all miles
• Claim tax relief: vehicles you use for workMileage Allowance Relief

What to do next

If you're an employer, update your expenses policy and payroll to 55p a mile and pay any April–May top-ups. If you're an employee paid less than the approved rate, start a mileage log now and claim relief after 5 April 2027, or sooner for earlier years. Company car drivers should check the advisory fuel rates every quarter. For the employer side of taxable benefits, see our P11D guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

What is the HMRC mileage allowance for 2026-27?

For cars and vans it's 55p a mile for the first 10,000 business miles in the tax year and 25p a mile after that. Motorcycles are 24p a mile and bicycles 20p a mile. You can add 5p a mile per passenger for carrying colleagues on business trips. These rates apply from 6 April 2026.

Has the 45p mileage rate gone up?

Yes. On 21 May 2026 the government raised the approved rate for cars and vans from 45p a mile to 55p a mile for the first 10,000 business miles, backdated to 6 April 2026. It was the first increase since 2011. The rate after 10,000 miles stays at 25p a mile. HMRC is applying the change informally until the legislation is updated.

Can I claim tax relief if my employer pays less than 55p a mile?

Yes. If your employer pays less than the approved amount for your business miles, you can claim Mileage Allowance Relief on the difference. You get relief at your tax rate, so a basic-rate taxpayer gets 20% of the shortfall back. Claim online or by post, or through your Self Assessment return if you file one, for the current year and up to 4 previous years.

What are the advisory fuel rates?

They're HMRC's per-mile rates for reimbursing business fuel in a company car, or for employees repaying private fuel. From 1 September 2026, petrol cars are 14p to 27p a mile depending on engine size, diesel 15p to 22p, and fully electric cars 7p (home charging) or 15p (public charging). HMRC reviews them quarterly.

Is commuting covered by the mileage allowance?

No. Ordinary commuting between home and your permanent workplace isn't business travel, so mileage payments for it are taxable and you can't claim relief. Journeys to a temporary workplace, such as a client site you visit for a limited time, do count. So do trips between workplaces during the day.

Do self-employed people get 55p a mile too?

Yes. Sole traders and partnerships using simplified expenses can claim 55p a mile for the first 10,000 business miles in a car or van from 6 April 2026, then 25p a mile. Motorcycles are 24p a mile. The 5p passenger rate isn't available to the self-employed.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Travel — mileage and fuel rates and allowances — HMRC / GOV.UK · accessed 9 October 2026
2. 2.Mileage Allowance Payments (480: Appendix 3) — HMRC · accessed 9 October 2026
3. 3.Expenses and benefits: business travel mileage for employees' own vehicles — rules for tax — HMRC / GOV.UK · accessed 9 October 2026
4. 4.Expenses and benefits: business travel mileage — rules for National Insurance — HMRC / GOV.UK · accessed 9 October 2026
5. 5.How to tax mileage payments for employees (480: Chapter 16) — HMRC · accessed 9 October 2026
6. 6.Advisory fuel rates — HMRC / GOV.UK · accessed 9 October 2026
7. 7.Claim tax relief for your job expenses: vehicles you use for work — HMRC / GOV.UK · accessed 9 October 2026
8. 8.Increased HMRC approved mileage rates for business travel announced — Association of Taxation Technicians · accessed 9 October 2026