MilometryHMRC mileage rates explained: 55p, 25p and the 10,000-mile line
What the approved mileage rates actually are, how the 10,000-mile threshold works across a tax year, and the bit that is easy to get wrong.
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If you are an employee using your own car for work, your employer can pay you a set amount per mile without any of it counting as taxable pay. These are the Approved Mileage Allowance Payments. The car and van rate was 45p from 2011 until it rose to 55p for journeys from 6 April 2026.
The 55p rate was announced on 21 May 2026 and backdated to 6 April, so if your employer paid 45p for some of those miles you may be able to claim tax relief on the gap. Anything you read quoting 45p as the current rate was written before the change.
If you are self-employed, the same car and van rates are available as simplified expenses: a deduction from your profit, not a payment.
The rates
| Vehicle | First 10,000 business miles | Above 10,000 | Banded? |
|---|---|---|---|
| Cars and vans | 55p per mile | 25p per mile | Yes |
| Motorcycles | 24p per mile | 24p per mile | No |
| Bicycles | 20p per mile | 20p per mile | No |
| Each passenger (only if your employer pays it) | 5p per mile | 5p per mile | No |
There is also a passenger rate. Your employer can pay up to 5p a mile for each colleague you carry on a business journey, free of tax. Paying it is optional. If they do not pay it you cannot claim tax relief for it, and there is no passenger rate for the self-employed.
The 10,000-mile line is per tax year, not per car
This is where people slip up. The threshold resets on 6 April each year, and for an employee it counts all your business miles for that job across every car and van you use for it, not each vehicle separately. (A second job with an unconnected employer has its own 10,000.) Two cars doing 6,000 business miles each for the same employer is 12,000 miles: the first 10,000 at 55p, the last 2,000 at 25p.
The other subtlety: a single journey can straddle the line. If you hit 10,000 miles halfway through a 40-mile drive, the first 20 miles are worth 55p and the rest 25p. Any log worth keeping should split that trip rather than round the whole thing one way or the other.
What if your employer pays less than 55p?
Very common, and worth money. If your employer pays you 25p a mile, you can claim tax relief on the difference between what you were paid and the approved rate. That is Mileage Allowance Relief, and you claim it through your Self Assessment return or a P87 if you do not file one.
Say you drove 4,000 business miles and were paid 25p:
- Approved amount: 4,000 × 55p = £2,200
- Actually paid: 4,000 × 25p = £1,000
- Relief due on: £1,200
You do not get £1,200 back. You get tax relief on £1,200, so a basic-rate taxpayer sees around £240. Still worth the ten minutes it takes to claim, and considerably more if your mileage is higher.
If your employer pays you more than the approved rate, the excess is taxable, and your employer should report it.
What a year is worth, by mileage
Assuming the car rate and no employer reimbursement:
| Business miles | At 55p | At 25p | Approved amount | Blended rate |
|---|---|---|---|---|
| 2,000 | £1,100 | n/a | £1,100 | 55.0p |
| 5,000 | £2,750 | n/a | £2,750 | 55.0p |
| 10,000 | £5,500 | n/a | £5,500 | 55.0p |
| 15,000 | £5,500 | £1,250 | £6,750 | 45.0p |
| 20,000 | £5,500 | £2,500 | £8,000 | 40.0p |
| 30,000 | £5,500 | £5,000 | £10,500 | 35.0p |
The blended rate is the column worth looking at. The more you drive, the less each mile is worth on average, which is the opposite of how most people assume it works, and it matters when deciding between a company car and your own.
What relief is actually worth to you
Relief is not a refund. It reduces your taxable income, so what you receive depends on your rate:
| Shortfall claimed | Basic rate (20%) | Higher rate (40%) | Additional rate (45%) |
|---|---|---|---|
| £200 | £40 | £80 | £90 |
| £1,200 | £240 | £480 | £540 |
| £2,200 | £440 | £880 | £990 |
| £5,500 | £1,100 | £2,200 | £2,475 |
If you drive a company car, these rates are not yours
Approved mileage rates apply to your own vehicle. If the car belongs to the company, fuel is handled through Advisory Fuel Rates instead, which are lower, vary by engine size and fuel type, and are revised quarterly. Mixing the two up is a common and costly mistake.
What different employer rates leave on the table
On 6,000 business miles in a tax year, where the approved amount is £3,300:
| Employer pays | You receive | Shortfall | Relief at 20% | Relief at 40% |
|---|---|---|---|---|
| 55p (the approved rate) | £3,300 | £0 | n/a | n/a |
| 45p (the old approved rate) | £2,700 | £600 | £120 | £240 |
| 30p | £1,800 | £1,500 | £300 | £600 |
| 25p | £1,500 | £1,800 | £360 | £720 |
| Nothing | £0 | £3,300 | £660 | £1,320 |
You can generally claim for the current tax year and the previous four. Earlier years use the approved rate for that year, which was 45p before 6 April 2026, so each back year is worth a little less than the table shows.
What actually needs recording
For each business journey: the date, where you went and where from, why it was business, and how far it was. Keep the running total for the tax year so the banding is right, and hold on to the records for at least 22 months after the end of the tax year if you are employed, or five years after the filing deadline if you are self-employed.
That is precisely the job Milometry does in the background: it records the journey as you drive, bands each trip against your running total for the year, and keeps the whole lot exportable as a PDF or CSV.
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)
- Increasing mileage rates: policy paper (HMRC)
- Employment Income Manual EIM31330: Mileage Allowance Relief (HMRC)
- Income Tax (Earnings and Pensions) Act 2003, section 233: passenger payments (legislation.gov.uk)
- Simplified expenses: vehicles (HMRC)
- Advisory fuel rates (company cars) (HMRC)
- How long to keep your records: employees and others filing a tax return (HMRC)
- How long to keep your records if you're self-employed (HMRC)
Rates and thresholds are correct at the time of writing and apply to the UK. This is general information, not tax advice: check with HMRC or your accountant before you file.
