Mileage Allowance Explained
Tax-free payments for using your own vehicle for business travel. HMRC sets approved rates of 45p per mile for the first 10,000 business miles and 25p per mile after that.
What is Mileage Allowance?
Mileage Allowance Payments (MAPs) are tax-free amounts your employer can pay you for using your own car, van, motorcycle or bicycle for business journeys. HMRC sets Approved Mileage Allowance Payments (AMAPs) that determine the maximum tax-free rate. If your employer pays less than the HMRC rate (or nothing), you can claim Mileage Allowance Relief (MAR) for the difference.
How it works
For cars and vans in 2025-26: 45p per mile for the first 10,000 business miles in the tax year, then 25p per mile after that. Motorcycles: 24p per mile. Bicycles: 20p per mile. Business miles do not include your regular commute to a permanent workplace. If your employer pays you less than these rates, you can claim tax relief on the difference through Self Assessment or by writing to HMRC.
Real example
Pete drives 12,000 business miles in 2025-26. His employer pays 25p per mile. The HMRC-approved amount is: 10,000 x 45p = £4,500, plus 2,000 x 25p = £500. Total: £5,000. His employer paid: 12,000 x 25p = £3,000. Pete can claim Mileage Allowance Relief on the £2,000 shortfall. At the 20% basic rate, this saves him £400 in tax.
Who does this affect?
Employees who use their own vehicle for business travel. This excludes commuting to your usual workplace but includes travel to temporary workplaces, client sites and different office locations. Self-employed individuals claim actual vehicle costs (fuel, insurance, maintenance) through their business expenses instead of the mileage rate.
HMRC source
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