MilometryYour employer pays 25p. Here is how tax relief on the gap works
If your employer pays less than the approved mileage rate, Mileage Allowance Relief gives you tax relief on the gap. It is often left unclaimed.
Algemene informatie, geen advies. Geschreven als algemene informatie en voor zover wij weten juist op 27 september 2026. Belastingregels veranderen, en hoe ze uitpakken hangt af van je eigen situatie. Dit is geen belasting-, juridisch of financieel advies: vraag een accountant, een belastingadviseur of de Belastingdienst voordat je erop vertrouwt.
Plenty of employers reimburse business mileage below HMRC's approved rate. Some pay 30p, some 25p, some a fixed amount per journey, some nothing at all.
In every one of those cases the employee can claim tax relief on the difference. Many do not, often because nobody has told them it exists.
How it works
For journeys from 6 April 2026 the approved rate for a car or van is 55p a mile for the first 10,000 business miles in a tax year, then 25p. (It was 45p before that.) If your employer pays less, you can claim relief on the gap against your own income tax.
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 difference too.
Worked example. 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 receive £1,200. You receive tax relief on it, so a basic-rate taxpayer gets around £240, a higher-rate taxpayer around £480.
The four-year backdating table
Relief can generally be claimed for the current tax year and the previous four. Each year uses its own approved rate: 55p for 2026-27, 45p for the four years before. For someone paid 25p who has never claimed:
| Business miles per year | Approved amount (2026-27) | Paid at 25p | Shortfall | Relief at 20% (2026-27) | Over five years |
|---|---|---|---|---|---|
| 3,000 | £1,650 | £750 | £900 | £180 | £660 |
| 6,000 | £3,300 | £1,500 | £1,800 | £360 | £1,320 |
| 10,000 | £5,500 | £2,500 | £3,000 | £600 | £2,200 |
| 15,000 | £6,750 | £3,750 | £3,000 | £600 | £2,200 |
The five-year figure is 2026-27 plus four earlier years at 45p.
Higher-rate taxpayers double every figure in the last two columns.
The catch is the same as always: you can only claim what you can evidence, and a five-year-old claim needs five-year-old records.
What if they pay nothing at all
Then the relief is on the whole approved amount. On 4,000 miles that is relief on £2,200, worth about £440 at basic rate.
This is the case where the sums get genuinely worth having, and it is common in sectors where mileage is treated as part of the job rather than as a reimbursable cost.
How to claim
If you file Self Assessment, it goes in the employment expenses section.
If you do not, use form P87 (Claim Income Tax relief for employment expenses), which can be done online.
You can generally claim for the previous four tax years as well as the current one, which for someone who has never claimed can mean a meaningful lump sum.
What HMRC will want
The amounts, and the ability to evidence them: business miles by tax year, what your employer paid you, and a record of the journeys behind the figures.
That last part is where claims fall over. "About 4,000 miles" is not evidence. A journey-level log with dates, destinations, purposes and distances is.
The bit that catches people
Passenger payments cannot be claimed this way. If your employer does not pay the 5p per passenger mile, there is nothing to claim relief on. The relief covers the vehicle rate only. Ask the employer instead.
Commuting never counts, regardless of what the employer pays for.
Getting the number
If you have been recording journeys, the figure already exists. If you have not, this is the argument for starting now rather than in April: four years of relief is worth claiming, and you can only claim what you can evidence.
Sources
- Claim tax relief for your job expenses: vehicles you use for work (HMRC)
- Travel, mileage and fuel rates and allowances (HMRC)
- Increasing mileage rates: policy paper (HMRC)
- Employment Income Manual EIM31330: Mileage Allowance Relief (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)
General information, not tax advice.
