Mileage Rates and Allowances

If you use your own vehicle for business travel, you can claim tax-free mileage allowances at HMRC's approved rates. These rates cover fuel, servicing, insurance, and wear and tear, making them a simple way to account for business travel costs without keeping detailed receipts.

What counts as business travel

Business travel is any journey you make in the course of your work, excluding your normal commute between home and your regular workplace. This includes trips to:

• Client or customer sites
• Temporary workplaces (where you work for less than 24 months)
• Business meetings at other locations
• Supplier premises
• Other business-related destinations

Travel between your home and regular place of work is considered private travel and does not qualify for mileage allowances.

Approved Mileage Allowance Payments (AMAPs)

HMRC sets standard rates called Approved Mileage Allowance Payments that you can use to calculate business mileage. When you claim at these rates, the payments are:

• Tax-free to employees
• An allowable business expense for self-employed individuals
• Deductible as a business cost for companies

These rates are designed to cover all the costs of running your vehicle for business purposes, including fuel, insurance, road tax, servicing, repairs, and depreciation.

Current mileage rates for 2025/26

The approved mileage rates for the 2025/26 tax year are:

Cars and vans:

• 45p per mile for the first 10,000 business miles in the tax year
• 25p per mile for each business mile over 10,000

Motorcycles:

• 24p per mile (regardless of distance)

Bicycles:

• 20p per mile (regardless of distance)

These rates apply per tax year (which runs from 6 April to 5 April), so the 10,000-mile threshold resets each April.

Passenger payments

If you carry fellow employees or business partners in your vehicle for business journeys, you can claim an additional 5p per mile per passenger. This applies regardless of the type of vehicle or the total mileage travelled.

This passenger rate covers the additional cost and inconvenience of carrying colleagues, but it only applies to passengers who are travelling for business purposes themselves.

How employees claim mileage

If you're an employee using your own vehicle for business travel, you should keep a record of:

• The date of each journey
• The start and end points
• The business purpose
• The miles travelled

Your employer can reimburse you tax-free at the approved rates. If your employer pays you less than the approved rates (or nothing at all), you can claim tax relief on the difference through your Self Assessment tax return or by claiming directly from HMRC.

If your employer pays you more than the approved rates, the excess is treated as taxable income and should be reported on your P11D form as a benefit in kind.

How self-employed people claim mileage

If you're self-employed or a sole trader, you can claim business mileage as an allowable expense on your Self Assessment tax return. You calculate the total by:

1. Recording all business miles during the tax year

2. Multiplying the mileage by the appropriate approved rate

3. Including the total in your business expenses

You cannot claim the actual running costs of your vehicle (fuel, insurance, servicing, etc.) if you use the mileage rate method—you must choose one approach or the other.

Company directors and their own vehicles

If you're a company director using your own vehicle for company business, the company can reimburse you at the approved rates tax-free. The company treats this as a business expense, and you don't pay tax or National Insurance on the reimbursement.

The same rules apply as for employees: if the company pays more than the approved rates, the excess is taxable. If it pays less, you can claim tax relief on the difference.

Company cars and fuel benefit

If you use a company car for business travel, different rules apply. You cannot claim the mileage rates because you don't own the vehicle. Instead:

• The company pays for the running costs
• You may be taxed on a company car benefit
• If your employer also pays for private fuel, you'll be taxed on a fuel benefit charge

The company can still reimburse you for business mileage in a company car, but this would be based on fuel costs alone (using HMRC's advisory fuel rates), not the full approved mileage rates.

Record keeping

Whatever your employment status, you must keep accurate records of your business mileage. HMRC may ask to see evidence if they review your tax affairs. Good practice includes:

• A mileage logbook (paper or electronic)
• Notes of the business purpose for each journey
• Regular updates—don't rely on memory months later
• Separate records for business and private mileage

Many people use smartphone apps or spreadsheets to track mileage automatically, which can make record keeping much easier.

Fuel-only payments

The approved mileage rates already include all vehicle running costs. If you prefer to claim only for fuel used on business journeys (rather than using the mileage rates), you must keep receipts and calculate the business proportion of your actual fuel costs.

This method is more complex and rarely beneficial compared to using the approved mileage rates, which provide a simpler and often more generous allowance.

Sources

• Rates and allowances: travel — mileage and fuel allowances

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.