Mileage Allowance for Employees (UK)

MyCarTracks_support · May 12, 2026, 7:36am

Mileage allowance for employees is the payment your employer makes when you use your own vehicle for business journeys. In HMRC language, these payments are Mileage Allowance Payments, or MAPs. GOV.UK’s business travel mileage rules explain that MAPs can be paid tax-free up to the approved amount for the vehicle and tax year.

For the 2026/27 tax year, the approved rates are 45p per mile for the first 10,000 business miles in a car or van and 25p per mile after that. Motorcycles are 24p per mile, and bicycles are 20p per mile. Those rates are the employee mileage allowance benchmark; they are not a guarantee that every employer must pay 45p per mile.

This article is educational and is not tax, payroll, legal, employment, or financial advice. HMRC treatment can change by tax year, vehicle type, payment structure, employment contract, and the facts of the journey. Check the official guidance or speak with a qualified adviser before relying on a calculation.

Quick answer

If you use your own car, van, motorcycle, or bicycle for business travel, your employer can pay MAPs for those business miles. Payments up to the approved amount are normally free of income tax. Payments above the approved amount are taxable as normal pay. If your employer pays less than the approved amount, or pays nothing, you may be able to claim Mileage Allowance Relief on the unused amount.

For a car or van in 2026/27, the approved amount is:

Business miles in the tax year	Approved rate
First 10,000 business miles	45p per mile
Business miles above 10,000	25p per mile

The trip still needs to qualify as business travel. Ordinary commuting between home and a permanent workplace usually does not count.

What mileage allowance means for employees

Mileage allowance is the everyday term for money paid to an employee who uses a private vehicle for work. HMRC calls the payment a MAP when it is paid for business travel in the employee’s own vehicle.

Common arrangements include:

a pence-per-mile reimbursement after you submit a mileage claim
a regular payment based on expected business mileage
a monthly car-cost payment plus a lower pence-per-mile rate
no employer reimbursement, leaving you to check whether MAR is available

The label on the payslip is not enough by itself. A payment that is genuinely tied to business miles can be a MAP. A regular cash car allowance may be taxable pay instead, even if you use the car for work. If you receive a car allowance, read Car Allowance for Employees (UK) before treating the allowance as tax-free mileage reimbursement.

HMRC mileage allowance rates for 2026/27

The approved mileage allowance payment rates are:

Vehicle type	First 10,000 business miles in the tax year	Each business mile after 10,000
Cars and vans	45p	25p
Motorcycles	24p	24p
Bicycles	20p	20p

HMRC groups vehicles by kind for MAP and MAR calculations. Cars and vans are one kind, motorcycles are another, and cycles are another. If you use two privately owned cars for the same employment in the same tax year, the car and van miles are counted together for the 10,000-mile threshold.

Electric and hybrid cars and vans sit in the car and van category. Electrically assisted pedal cycles use the bicycle rate if they meet the EAPC rules; other electric bikes are treated like motorcycles for this purpose.

For a rate-focused table and more examples, read Current HMRC Mileage Rates (UK). For old employee mileage files, use Historical HMRC Mileage Rates (UK).

What counts as business mileage

Business mileage normally means journeys you make in the performance of your job duties. Examples can include:

travelling from one work site to another
visiting customers, clients, suppliers, patients, or temporary job sites
making a business delivery or collection
travelling to a temporary workplace where the temporary workplace rules are met

The common trap is commuting. Travel between home and a permanent workplace is usually ordinary commuting, with no deduction for that cost under HMRC’s ordinary commuting guidance. A trip to a temporary workplace can qualify, but the facts need to support it.

Do not start with the rate. Start with the journey. A 45p calculation on non-qualifying commuting miles will still be wrong.

What MAPs cover

For an employee using their own vehicle, the approved mileage rate is meant to cover the cost of owning and running the vehicle for business travel. The employee vehicle tax relief guidance does not let you also claim separately for costs such as fuel, electricity, vehicle tax, MOTs, or repairs when you claim through the approved mileage rate route.

Some costs are separate from the mileage allowance. Parking, tolls, congestion charges, public transport, hotels, and meals may be handled under your employer’s expenses policy or the general employee travel rules. Keep receipts where those costs are claimed separately. Fines and penalties should not be treated as normal business mileage expenses.

How to calculate employee mileage allowance

For each tax year, multiply your qualifying business miles by the approved rate for the vehicle type. Then compare that approved amount with what your employer paid.

Example: you drive 7,500 business miles in your own car in 2026/27.

Calculation	Amount
Approved amount: 7,500 miles x 45p	£3,375
Employer pays 35p per mile: 7,500 x 35p	£2,625
Unused approved amount	£750

The £2,625 employer payment is below the approved amount. The unused £750 may support a MAR claim if you meet the employee tax-relief conditions. You do not receive £750 as a direct repayment from HMRC. The relief is tax relief on the unused approved amount.

If you drive 12,000 business miles in a car or van, the approved amount uses both car and van rates:

Calculation	Amount
10,000 miles x 45p	£4,500
2,000 miles x 25p	£500
Approved amount for the tax year	£5,000

If your employer pays the approved amount

When your employer pays exactly the approved amount for qualifying business miles, the MAP is normally within the tax-free limit for income tax. There is no unused amount for MAR for that vehicle kind and tax year.

You still need the mileage record. Employers need support for the business miles they reimburse, and employees need the record if a later question comes up.

If your employer pays less than the approved amount

If your employer pays less than the approved amount, the employer usually has no extra income tax reporting to make on the shortfall. You may be able to claim Mileage Allowance Relief on the unused amount.

For example, if the approved amount is £3,375 and your employer paid £2,625, the unused amount is £750. A basic-rate taxpayer would usually expect the tax value to be based on the tax relief due on £750, not a £750 cash reimbursement. Higher-rate and additional-rate taxpayers can be affected differently.

Use Mileage Allowance Relief (UK) for a fuller explanation of eligibility and calculations. Use How to Claim Mileage Allowance Relief From HMRC when you need the P87 or Self Assessment workflow.

If your employer pays more than the approved amount

If your employer pays more than the approved amount, the excess is taxable as normal pay. The employer must report the amount above the approved amount, add it to pay, and deduct and pay tax as normal.

Example: the approved amount is £2,700, but your employer pays £3,000. The £300 excess is the taxable part for income tax. Payroll still needs to consider National Insurance separately because motoring payments have their own NIC calculation.

National Insurance on motoring payments

National Insurance uses different wording from the income tax MAP rules. The two terms to know are relevant motoring expenditure (RME) and qualifying amount.

For NIC, RME can include MAPs, payments made to someone else for the employee’s benefit, and other cash payments toward the employee’s use of their vehicle. The qualifying amount is the amount of RME that can be paid for the earnings period without Class 1 NIC on that RME.

The qualifying amount rates are:

Vehicle type	NIC qualifying amount rate
Cars and vans	45p per business mile
Motorcycles	24p per business mile
Bikes	20p per business mile

If RME is above the qualifying amount for the earnings period, the excess is added to other earnings for Class 1 National Insurance. If RME is below the qualifying amount, there is nothing to report and no NIC to pay on that RME shortfall. There is no MAR-style top-up for National Insurance, and the unused qualifying amount cannot be carried forward.

Passenger payments

Your employer can pay a separate passenger payment when you carry fellow employees in your own car or van on a business journey that is also a work journey for those passengers.

The approved passenger payment rate is 5p per passenger per business mile. Payments up to that rate do not need to be reported for tax or NIC under the passenger payment rules.

Passenger payments are separate from your own MAPs. There is no Mileage Allowance Relief if your employer pays less than 5p per passenger mile or pays nothing for passengers.

Mileage records your employer and HMRC may need

Keep the log at trip level, not just as a monthly total. A useful employee mileage record includes:

date of the journey
start and end point
start and end postcodes where a P87 claim may be needed
business purpose or reason for the journey
vehicle used
miles driven
whether the journey was business or personal
employer mileage payment received
parking, toll, public transport, hotel, or meal receipts where claimed separately
tax year and rate used

For postal P87 claims, vehicle mileage logs must include the reason for every journey and the start and end postcodes. If you claim for more than one employment, keep a mileage log for each employment.

The easiest time to record the journey is when it happens. Rebuilding a mileage log after payroll has closed usually means missing addresses, weak journey purposes, or a total mileage number that is hard to defend.

How MyCarTracks helps with employee mileage allowance

MyCarTracks can help employees and teams keep business-mile records before payroll or tax relief questions arise. You can capture trips automatically, classify business and personal journeys, add notes, keep vehicle records, and export reports for reimbursement review.

For an employer, the useful part is consistency. A monthly report can show the driver, vehicle, journey dates, miles, purposes, and reimbursement period before the claim reaches payroll. For an employee, the same record can support a MAR calculation if the employer paid less than the approved amount.

Use MyCarTracks automatic mileage tracking if you want the mileage log built as trips happen.

Mileage allowance and car allowance are not the same

A car allowance is usually a cash benefit paid through payroll to help an employee fund a car. It may be paid monthly, quarterly, or annually. It is normally taxable as pay and subject to National Insurance.

MAPs are different. A MAP is tied to supported business miles in an employee’s own vehicle. An employee can receive a car allowance and still receive MAPs for business miles, but the payments need to be identified correctly. A car allowance does not automatically make every business mile tax-free, and it does not remove the need for mileage records.

If your employer pays a car allowance and a low mileage rate, you may still need to check MAR on the business-mile shortfall. The later vehicle-benefit comparison belongs in Car Allowance for Employees (UK).

Self-employed drivers use different mileage rules

Self-employed mileage is a separate HMRC route. Sole traders and eligible partnerships may be able to use simplified expenses for cars, goods vehicles, and motorcycles, or they may claim actual vehicle costs with a business-use adjustment. They do not receive employee MAPs from an employer and they do not claim employee MAR on an employer shortfall.

If you are self-employed, use Self-Employed Mileage Allowance (UK). If you are both employed and self-employed, keep the mileage records separate so each journey is claimed under the correct role.

Common employee mileage allowance mistakes

using the 45p rate for ordinary commuting
assuming every employer must pay 45p per mile
treating a cash car allowance as tax-free MAPs
claiming fuel, MOTs, repairs, vehicle tax, or electricity separately after using the approved mileage rate for employee tax relief
forgetting that car and van miles of the same kind are combined for the 10,000-mile threshold
treating passenger payment shortfalls as MAR
keeping only monthly totals instead of journey-level records
ignoring National Insurance when regular motoring payments are run through payroll
mixing employee MAP rules with self-employed simplified expenses

Employee mileage allowance FAQ

Do companies have to pay 45p per mile?

Not just because HMRC publishes the approved rate. The approved mileage rate is a tax benchmark. Your contract, employer policy, sector rules, or local agreement may affect what your employer must pay, but HMRC’s 45p rate by itself is not a general legal payment requirement.

Is mileage allowance taxable in the UK?

MAPs up to the approved amount are normally free of income tax. Amounts above the approved amount are taxable as normal pay. National Insurance has a separate RME and qualifying amount calculation.

Can I claim tax relief if my employer pays 30p per mile?

You may be able to claim Mileage Allowance Relief on the difference between the approved amount and what your employer paid, if the journeys qualify and you meet the employee tax-relief conditions. The claim gives tax relief on the unused approved amount, not a direct reimbursement of the whole shortfall.

What if my employer pays no mileage allowance?

If you use your own vehicle for qualifying business travel and receive no MAPs, the full approved amount may be the unused amount for MAR. You still need records of the business journeys and you must have paid tax in the year you are claiming for.

Can I claim mileage for a company car?

Not under the own-vehicle MAP rules. Company car users may be able to claim tax relief on fuel or electricity they paid for business trips, after subtracting any employer reimbursement. Keep the company car fuel question separate from private-vehicle MAPs.

Can I claim passenger payments from HMRC?

No. Passenger payments are an employer payment. The approved rate is 5p per passenger per business mile in a car or van, but there is no MAR if your employer pays less or pays nothing.