Mileage allowance calculator

How the calculation works

Approved Mileage Allowance Payments are a flat amount per business mile that an employer may pay free of tax and National Insurance. They are not a fuel reimbursement. They are meant to cover fuel, insurance, road tax, servicing, tyres and depreciation together, which is why they are worth more than the petrol costs and why they do not move with the price at the pump.

The car and van rate steps down once you pass ten thousand business miles in the tax year, because the fixed costs of running the vehicle have by then largely been covered.

2026/27 approved rates

The car and van rate for the first ten thousand miles rose from 45p to 55p for 2026-27. The ten thousand mile threshold counts business miles across the tax year as a whole, not per journey and not per employer vehicle. There is also an extra 5p a mile where you carry a colleague on the same business journey.

Worked examples

6,000 business miles in a car. All of them fall in the first band: 6,000 multiplied by 55p is £3,300.00.

14,000 business miles in a car. The first 10,000 at 55p is £5,500.00, and the remaining 4,000 at 25p is £1,000.00, giving £6,500.00.

14,000 miles where the employer pays a flat 30p. The employer pays £4,200.00 against an approved amount of £6,500.00, leaving a shortfall of £2,300.00. You may claim tax relief on that shortfall, which is worth £460.00 to a basic rate taxpayer and £920.00 to a higher rate taxpayer. Relief reduces the tax you pay; it is not a payment of the shortfall itself.

Important rules and exceptions

What counts as a business mile. Travel undertaken in the course of the job, and travel to a temporary workplace. Ordinary commuting between home and a permanent workplace does not count, and neither does private travel.

If the employer pays more than the approved rate. The excess is treated as earnings and is taxed. The approved rate is a ceiling for tax-free payment, not a target.

If the employer pays less, or nothing. You may claim Mileage Allowance Relief on the difference through a Self Assessment return, or on form P87 if you do not file one.

Company cars are different. These rates are for employees using their own vehicle. Where the employer provides the car, Advisory Fuel Rates apply instead, and they are lower because the vehicle's fixed costs are already borne by the employer.

Keep a record. A contemporaneous log of date, journey, purpose and miles is what makes a claim straightforward. Reconstructing one afterwards from a diary rarely goes well.

Sources, and when we checked them

Rates checked against GOV.UK on 18th September 2026: travel, mileage and fuel allowances and tax relief for employees, business mileage. Every statutory figure this site uses is listed with its date and source on the rates page.

A fuller explanation sits in the guide to HMRC mileage rates for 2026/27.