Mileage allowances explained

If you drive your own car for work, the mileage rates HMRC lets you claim are the difference between a decent tax saving and nothing at all. The official Approved Mileage Allowance Payments (AMAP) rates tell you what counts — and in 2026/27 the headline rate for cars went up.

The 2026/27 rates

• Cars and vans — 55p per mile for the first 10,000 business miles, then 25p per mile above that
• Motorcycles — 24p per mile
• Bicycles — 20p per mile
• Passengers — 5p per mile for carrying fellow employees in a car or van

The car rate rose from 45p to 55p on 6 April 2026 — the first change in years — so if you run an older spreadsheet, update your numbers.

Example. You drive 15,000 business miles in your own car. The first 10,000 miles at 55p = £5,500. The remaining 5,000 at 25p = £1,250. Total claim = £6,750. An employee is reimbursed this tax-free; a self-employed person deducts it from business profits.

Commuting doesn’t count

The rates apply to business mileage — travel between different workplaces or to visit clients. Travel between your home and a fixed workplace is ordinary commuting and can’t be claimed, no matter how long the journey.

Employees: claim tax relief, not just reimbursement

If your employer pays you less than the AMAP rate per mile — or nothing at all — you can claim tax relief on the difference. You don’t reclaim the full mileage amount: you get tax relief at your marginal rate on what you were underpaid, through Self Assessment or a tax code adjustment.

Self-employed: simplified expenses

Sole traders can use the simplified mileage rates instead of working out actual vehicle costs. The rate covers fuel, insurance, tax, servicing and depreciation — so you can’t deduct those separately as well. Choose one method per vehicle and stick with it.

See the maths

Use the Mileage Expenses calculator for your exact claim, and the self-employed tax calculator to see how the expense reduces your tax bill.