MilometryClaiming mileage as a company director
Your own car, your own company, and the paperwork that keeps approved mileage payments out of the taxman's definition of salary.
Information générale, pas un conseil. Rédigé à titre d’information générale et exact à notre connaissance au 27 septembre 2026. Les règles fiscales changent et leur application dépend de votre situation. Ceci n’est pas un conseil fiscal, juridique ou financier : vérifiez auprès d’un expert-comptable, d’un conseiller fiscal ou de l’administration fiscale avant de vous y fier.
Updated 27 September 2026: the car and van rate rose from 45p to 55p for journeys from 6 April 2026 (announced 21 May 2026). Figures below use 55p.
If you run a limited company and drive your own car on its business, the company can pay you up to the approved mileage rates, 55p a mile for the first 10,000 business miles in the tax year, then 25p. Up to those rates the payment is tax free in your hands, and it is normally a deductible expense for the company.
It is how the company covers the cost of business driving in your own car without creating a tax charge. It is not a way to take profit out: every payment has to match business journeys you actually made. It is also easy to do sloppily.
You are an employee here
A director is an office holder, and for these purposes the same rules apply as to any employee. The car is yours, the company reimburses you for business journeys, and the approved amount is what it can pay without creating a tax charge.
Pay more than the approved amount and the excess is earnings, reportable and taxable. Pay less and you can claim tax relief (Mileage Allowance Relief) on the shortfall against your own Income Tax, exactly as an employee would. For National Insurance the tax-free figure is 55p for every business mile, with no 25p band, so a payment between the two figures can be free of National Insurance but still partly taxable.
Reimbursing business mileage: salary route vs approved mileage
Say you drove 10,000 business miles in your own car this tax year. The company can pay you £5,500 of extra salary instead, or pay £5,500 as approved mileage:
| Extra salary | Approved mileage | |
|---|---|---|
| Cost to the company | £5,500 + employer NIC | £5,500 |
| Income tax on you | On the salary, but you can claim Mileage Allowance Relief of £5,500 against it | None |
| Employee NIC | Yes, on the £5,500 | None |
| Corporation tax deduction for the company | Normally yes | Normally yes |
| Paperwork required | Payroll, your own relief claim, and a mileage log | A mileage log |
The real difference is National Insurance, on both sides, plus the extra claim. The log matters either way: the tax-free treatment rests on the payment being a reimbursement of real business journeys rather than disguised remuneration.
The record is the whole thing
Because you are both sides of this transaction, nobody else is checking your figures, which is precisely why the record needs to stand on its own.
What is expected is a journey-level log: date, from, to, purpose, distance. A monthly transfer from the company account described as "mileage" with no underlying detail is not a record, it is a payment. If the detail is missing, the payment starts to look like undeclared salary, and that is an expensive reclassification.
Commuting is still commuting
Owning the company does not change the rule. Travel from home to your permanent workplace is ordinary commuting whether the workplace belongs to your employer or to you.
Journeys from home to a client or a temporary site are business travel in the usual way. The drive from home to a permanent workplace only becomes business travel if home is itself a workplace because the job requires it, and where you live is dictated by the job, which HMRC looks at closely. "The company is registered at my house" does not by itself make any drive claimable. This is worth getting right, because it applies to a lot of journeys repeated a lot of times.
Company car versus your own
If instead the company provides the car and it is available for your private use, none of the above applies: the car is a taxable benefit with its own charge, and business fuel is usually reimbursed at Advisory Fuel Rates rather than approved mileage rates. How the two compare depends on the car's price, its emissions and your business and private mileage.
Keeping it simple
Record every journey as it happens, mark it business or personal, tag home and any permanent workplace so commuting is excluded automatically, and export the year as a CSV. Then the mileage the company paid you and the mileage you can evidence are the same number, which is the whole point.
Sources
- Business travel mileage for employees' own vehicles (HMRC)
- Travel, mileage and fuel rates and allowances (HMRC)
- Advisory fuel rates (HMRC)
- Increasing mileage rates (HMRC policy paper)
- EIM31205: employees using own vehicles for work, overview (HMRC)
- EIM31330: Mileage Allowance Relief, outline (HMRC)
- EIM32370: travel from home where it is a place of work (HMRC)
- Income Tax (Earnings and Pensions) Act 2003, section 231: mileage allowance relief (legislation.gov.uk)
- Tax relief for vehicles you use for work (HMRC)
- How long to keep your records (HMRC)
- 490: Tax and National Insurance contributions for employee travel (HMRC)
General information, not tax advice. Director remuneration has knock-on effects: take proper advice on the whole picture.
