MilometryThe 5p a mile your employer can pay for passengers
Your employer can pay up to 5p a mile, tax free, for each colleague you carry on a business journey. It is optional, and unpaid it cannot be claimed.
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.
If you carry a colleague on a business journey, your employer can pay you up to 5p per passenger per mile, tax free. Few employers do unless asked. It is easy not to know about, and it works differently from the main rate.
How it works
The passenger payment is up to 5p a mile for each fellow employee who is also travelling on business, paid by your employer. It is not banded. The 10,000-mile threshold that drops your car rate to 25p does not touch it. Every passenger mile is 5p, all year.
Two colleagues in the car for a 120-mile round trip is £12 on top of the mileage payment, if your employer pays it. Do that fortnightly and it is over £300 a year.
What it adds up to
| Journey pattern | Passengers | Business miles/yr | Passenger payment (if your employer pays it) |
|---|---|---|---|
| Fortnightly 120-mile round trip | 1 | 3,120 | £156 |
| Fortnightly 120-mile round trip | 2 | 3,120 | £312 |
| Weekly 80-mile site visit, 48 weeks | 2 | 3,840 | £384 |
| Daily 40-mile run, 3 days a week | 1 | 6,240 | £312 |
| Territory driving, colleague half the time | 1 (50%) | 20,000 | £500 |
Unlike the main rate, this is not banded: every passenger mile is 5p regardless of your annual total.
The catch employees need to know
Here is where it differs from the main rate, and why it is worth understanding before you rely on it.
If your employer pays you a passenger payment, up to 5p a mile is tax-free. But if your employer pays you nothing for carrying passengers, you cannot claim tax relief on the difference the way you can with the main mileage rate.
Mileage Allowance Relief covers the gap between what you were paid and the approved rate for the vehicle. It does not extend to passenger payments. If the employer does not pay it, there is nothing to claim.
That makes this one worth raising with your employer rather than saving up for your tax return. Some will pay it if asked, because it costs them little and is tax-free up to 5p.
For the self-employed
Nothing. If you are self-employed there is no passenger rate at all. The simplified expenses rate is a deduction for the vehicle and its running costs, and HMRC's guidance says the number of people in the vehicle does not affect it.
The conditions
- The passenger must be a fellow employee
- They must also be travelling on business, not being dropped somewhere convenient
- It applies to the same journey, in your own car or van or a company one
- Your employer has to pay it: there is no tax relief if they do not
A spouse, a client or a friend does not count, however useful the lift was.
Recording it
The evidence is the journey plus who was in the car. Milometry lets you add passengers to a trip, works out the payment at 5p a mile per head, and shows it alongside the mileage claim, so if your employer does pay it, the number is already there rather than being reconstructed from memory at year end.
The same passenger count also drives the fuel split for personal journeys, which is a different calculation for a different purpose, but the same question: who was actually in the car.
Sources
- Travel, mileage and fuel rates and allowances (HMRC)
- Business travel mileage for employees' own vehicles (HMRC)
- Claim tax relief for your job expenses: vehicles you use for work (HMRC)
- Income Tax (Earnings and Pensions) Act 2003, section 233: passenger payments (legislation.gov.uk)
- Employment Income Manual EIM31330: Mileage Allowance Relief (HMRC)
- Business Income Manual BIM75005: simplified expenses for vehicles (HMRC)
General information for UK drivers, not tax advice.
