Mileage Allowance Rates UK: 45p, 25p, 24p — How to Claim (2026/27)

The HMRC mileage rate is one of the UK’s most widely relevant tax reliefs — used by millions of employees who drive their own cars for work, and by self-employed people who want a simple way to deduct vehicle costs. Yet many people either claim too little, claim incorrectly, or do not claim at all.

This guide covers every aspect of HMRC’s approved mileage allowance: the rates, who can claim, how to claim, and when to consider switching to actual costs.

HMRC Approved Mileage Allowance Payment (AMAP) Rates 2026/27

These rates have been frozen since 2011 — a growing issue as fuel, insurance, and car running costs have risen considerably. Many employers supplement the AMAP rate; others pay less, creating a relief gap.

What Counts as Business Mileage?

Business mileage includes journeys driven for work purposes in your own vehicle:

Temporary workplaces: If you are sent to work at a location for less than 24 months (and it is not your permanent base), travel to that location qualifies as business mileage. Once you expect to work at a location for more than 24 months, it becomes a permanent workplace and travel is ordinary commuting.

Employees: Claiming Mileage Tax Relief

If Your Employer Pays Too Little (or Nothing)

Many employees use their own cars occasionally for business travel and receive no mileage payment, or receive less than the AMAP rate. You can claim tax relief on the shortfall.

Formula: Tax relief = (AMAP rate − employer rate) × business miles × your income tax rate

Example:

• Business miles: 6,000 per year
• Employer pays: 20p/mile
• AMAP rate: 45p/mile
• Gap: 25p/mile
• Allowable deduction: 25p × 6,000 = £1,500
• Tax relief at 20%: £300 per year
• Tax relief at 40%: £600 per year

If Your Employer Pays More Than the AMAP Rate

Payments above the AMAP rate are treated as taxable income and are subject to PAYE. If your employer pays 50p/mile and you drive 8,000 miles:

• AMAP: 45p × 8,000 = £3,600 (tax-free)
• Excess: (50p − 45p) × 8,000 = £400 taxable income

How to Claim: P87 or Self-Assessment

P87 form (online at GOV.UK): Use this if you are an employee and:

• You are not registered for Self-Assessment
• Your mileage relief claim is £2,500 or less
• You can claim for the current year and up to 4 previous years

Self-Assessment: If you are already filing a return, claim under “Employment Expenses” on your tax return. You can also claim via Self-Assessment if your P87 claim exceeds £2,500.

What HMRC needs: Keep a mileage log showing the date, destination, business purpose, and miles for each journey. HMRC may ask to see this if your claim is inspected.

Passenger Payments

If you carry a colleague on a business journey in your own car, you can claim an additional 5p per mile per passenger (on top of the AMAP rate). This is capped at the number of fellow employees being carried and does not apply to passengers who are not employees.

Electric Vehicles and Hybrid Cars

The 45p/25p AMAP rates apply equally to electric vehicles and hybrids — the same as petrol/diesel cars. This is a notable quirk given the lower fuel cost of EVs, but HMRC has not updated the rate to reflect this difference.

For employees with company EVs (not personal vehicles), a separate Advisory Fuel Rate applies — 7p per mile for EVs in 2026/27 — used when charging is reimbursed.

Self-Employed: Mileage Rates vs Actual Costs

Sole traders and partners have two options for vehicle expenses:

Option 1: HMRC Flat Mileage Rate

Same rates as employees:

• 45p for first 10,000 business miles
• 25p above 10,000 miles
• 24p motorcycle, 20p bicycle

Simple to use — just keep a mileage log and multiply. No need to track fuel receipts, servicing, insurance, or depreciation separately.

Option 2: Actual Costs Method

Claim the proportion of actual vehicle running costs attributable to business use:

• Fuel, oil
• Insurance
• MOT and servicing
• Loan/lease interest (but NOT capital repayment on a purchase loan for full vehicles)
• Depreciation (capital allowances under business use proportion)

Example: Self-employed plumber Phil drives 20,000 miles per year — 14,000 business, 6,000 private. Business use: 70%.

• Total running costs: £8,500/year
• Allowable business costs: 70% × £8,500 = £5,950

Using mileage rates instead:

• 10,000 × 45p = £4,500
• 4,000 × 25p = £1,000
• Total: £5,500

In Phil’s case, actual costs (£5,950) beat mileage rates (£5,500). This is common for high-mileage drivers with expensive vehicles.

Which to Choose?

Important: Once you claim actual costs for a vehicle, you must continue with actual costs for that vehicle. You cannot switch to mileage rates mid-life with the same vehicle.

Limited Company Directors

If you use your own car for business and your company pays you mileage:

• Payments up to the AMAP rate (45p/25p) are tax-free to you and deductible for the company — the most tax-efficient approach
• Payments above the AMAP rate: excess is taxable income

Many directors opt to own a car personally, claim 45p/mile from the company, and avoid the complexity of a company car BIK charge. This works well for lower-mileage drivers. High-mileage drivers may benefit from a company EV instead.

How to Keep a Valid Mileage Log

A mileage log should contain, for each journey:

• Date
• Start point
• End point / destination
• Business purpose
• Miles driven

Many people use mileage tracking apps (MileIQ, Driversnote, TripLog) that automatically log journeys via GPS and allow you to categorise each trip as business or personal.

Related Guides

• P11D Benefits in Kind Guide
• Self-Employed Expenses Guide
• Director Salary and Dividend Mix 2026/27
• Company Car vs Car Allowance Guide
• Self-Assessment Tax Return Guide