For the 2026/27 UK tax year, HMRC's approved car and van mileage amount uses 55p per business mile for the first 10,000 miles and 25p thereafter when an employee uses their own vehicle for qualifying work travel. The tax year runs from 6 April 2026 to 5 April 2027. The first-band rate was 45p before 6 April 2026.
These are employee-owned vehicle rules. Company cars, private fuel supplied by an employer and self-employed business deductions need their own treatment. Check the vehicle arrangement before choosing a rate.
Rates checked against HMRC's employee vehicle guidance on 7 October 2026.
Approved mileage rates at a glance
| Employee's own vehicle | First 10,000 business miles in 2026/27 | Business miles above 10,000 |
|---|
| Car or van, including an electric car | 55p per mile | 25p per mile |
| Motorcycle | 24p per mile | 24p per mile |
| Bicycle | 20p per mile | 20p per mile |
The car and van threshold concerns cumulative qualifying mileage in the tax year. It does not reset every month or when a claim form is submitted. Keep the running total for the employment and have payroll check the rules if associated employments or other complications apply.
The mileage amount covers vehicle costs such as fuel or electricity, servicing and insurance. Do not also claim those same costs separately under the mileage calculation. Other qualifying journey expenses, such as parking or tolls, require their own evidence and treatment.
Which journeys qualify?
The journey must be qualifying business travel. Ordinary commuting between home and a permanent workplace does not qualify. Travel involving a temporary workplace can qualify under the relevant rules; calling a location temporary on a claim form does not establish that it is one.
Record a specific business purpose. “Client service visit, job reference 104” is more useful for review than “work”. Separate private detours and ask payroll to resolve uncertain journeys before including them in the tax-free calculation.
The rates establish the approved amount for tax purposes. Your employer can have a different reimbursement policy, subject to its employment arrangements. Paying a lower rate does not change HMRC's approved calculation, and paying a higher rate may create reporting and tax obligations.
Example 1: a 200-mile business journey
Assume an employee uses their own car, the whole journey qualifies, and all 200 miles fall within the first 10,000 business miles for 2026/27.
200 miles × £0.55 = £110 approved amount.
If the employer pays £110 for that journey, the payment is within this approved amount. If it pays £80, the difference is £30. Subject to eligibility, Mileage Allowance Relief concerns that £30 shortfall. It is not a £30 cash refund: the tax saving depends on the employee's tax position.
Keep the journey record and the amount actually paid. A claim calculated correctly can still be duplicated if the employee submits it through two different processes.
Example 2: crossing 10,000 miles in one claim
An employee has already driven 9,900 qualifying business miles in their own car during 2026/27. The next claim covers 300 qualifying miles.
| Part of the claim | Calculation | Approved amount |
|---|
| Remaining miles in the first band | 100 × £0.55 | £55 |
| Miles above the threshold | 200 × £0.25 | £50 |
| Total for the 300-mile claim | £55 + £50 | £105 |
The cumulative total becomes 10,200 miles. Applying 55p to all 300 miles would produce £165 and overstate the income-tax approved amount by £60. Applying 25p to the whole claim would miss the 100 miles still available in the first band.
National Insurance uses a different threshold rule
Do not reuse the income-tax bands mechanically for payroll National Insurance. Under HMRC's mileage rules for National Insurance, the qualifying amount for cars and vans uses 55p for every qualifying business mile from 6 April 2026, with no 10,000-mile step-down. Payroll compares relevant motoring expenditure with the qualifying amount under those rules.
That difference can matter after the income-tax threshold is crossed. It does not create a higher income-tax exemption or require an employer to pay 55p for every mile. Have payroll assess the two treatments separately.
Own electric car or company electric car?
An employee's own electric car uses the same approved car mileage rates as an employee's own petrol or diesel car. The energy source does not turn it into a company-car reimbursement.
For a company electric car, HMRC publishes separate advisory electricity rates. For other company cars, advisory fuel rates depend on fuel type and engine size. Use the company-car fuel benefit and VAT guide for that scope, and check the official rates effective for the journey.
A mileage record finance can review
| Field | Why it matters |
|---|
| Employee and vehicle arrangement | Confirms whose vehicle is used and the applicable rules |
| Journey date | Places the trip in the correct tax year |
| Start, destination and business purpose | Supports the eligibility review |
| Qualifying miles | Excludes ordinary commuting and private mileage |
| Previous cumulative business miles | Identifies any split at 10,000 miles |
| Applicable rates and calculation | Makes the approved amount reproducible |
| Amount paid by the employer | Supports any shortfall or excess calculation |
| Reviewer and decision | Records approval and unresolved questions |
Mileage claims and supplier purchases are different records. Rally's expense workflow helps collect receipts, connect them with card payments and prepare reviewed accounting exports. This does not calculate an employee's mileage entitlement. Keep mileage approval with the person or system responsible for payroll, and use the expense policy template to explain that process to employees.
