HMRC Mileage Rates and Allowance - How to Claim

If you use your own vehicle for work, the HMRC mileage rates and allowances can really help you get some money back for your business travel. These rates are set by HMRC to help cover costs like fuel, wear and tear, and other expenses related to your vehicle. These rates help work out how much you can claim tax-free if you use your car, van, motorbike, or even a bicycle for business related travel. Instead of keeping track of every little expense, you can just multiply your business miles by HMRC’s fixed rates to figure out what you can claim.

This can lead to some nice tax savings. Whether you’re self-employed, a company director, or an employee using your personal car for work trips, you might be eligible for tax relief or even tax-free mileage payments from your employer or business.

A lot of people miss out on this benefit simply because they don’t fully understand how it works. That’s why it’s crucial to be aware of the current mileage rates and how to use them effectively.

For the 2025/26 tax year, HMRC has mostly kept the mileage rates the same. This guide will walk you through everything you need to know about the latest HMRC mileage rates and how to make the most of them.

Mileage allowance refers to the amount you can claim when you use your personal vehicle for business purposes. It’s designed to help cover expenses like fuel, insurance, repairs, and the general wear and tear that comes with driving. Instead of tracking every single cost, HMRC lets you claim these expenses using standard approved mileage rates.

The official term for this is Approved Mileage Allowance Payments (AMAPs). These are the fixed amounts per mile that HMRC allows you to claim without having to pay tax on them. Rather than claiming separately for fuel, maintenance, insurance, and other running costs, you can simply use HMRC’s mileage claim rates. For instance, if you drive your car for work, you can claim 45p per mile for the first 10,000 miles in a tax year, and 25p for any miles beyond that.

Difference Between Mileage Rate and Mileage Allowance

The mileage rate is the fixed amount HMRC sets for each mile you travel for business. For example, if you’re driving a car, the rate could be 45p per mile for the first 10,000 miles in a tax year.

On the other hand, the mileage allowance is the total amount you can claim based on the number of business miles you drive. So, if you drive 5,000 business miles in a year, your allowance would be 5,000 x 45p = £2,250.

Why Does It Matter?

HM Revenue and Customs mileage rates are helpful because they allow people to reclaim part of their travel costs without incurring extra tax. If your employer pays you less than the HMRC rate, or doesn’t reimburse you at all, you can claim tax relief on the difference through your Self Assessment tax return or a P87 form.

What Vehicles Are Covered?

HMRC mileage rates apply to various personal vehicles used for work, including:

Cars and Vans
Motorcycles
Bicycles

Each vehicle type has its own rate per mile, designed to cover typical running costs associated with business travel. Just a heads up: commuting between your home and your regular workplace doesn’t count, you can only claim for journeys that are business-related.

Both self employed and employees can claim business mileage.

Every tax year, HMRC sets fixed mileage rates for business travel in your own vehicle. These rates help you work out how much you can claim without needing to keep receipts for fuel, insurance, or repairs. You can use these rates to claim expenses if you're self-employed or to ask your employer for mileage payments if you're an employee using your personal vehicle for work. For the 2025/26 tax year, the rates remain the same as the previous year, making it easier for people to plan and claim.

How to Calculate Mileage Allowance

To calculate your mileage claim, simply multiply your business miles by the HMRC mileage rate for your type of vehicle. Below is a simple step-by-step guide to help you figure out your mileage allowance.

Step 1: Track all your business journeys. Write down the date, purpose, start and end points, and the number of miles.

Step 2: Add up the total number of business miles you’ve driven during the tax year. Only count journeys that are work-related — not personal or commuting to your usual workplace.

There are two approaches you can take:

1. Add up all your motor expenses for the year. Calculate the number of business miles as a percentage of your total miles. This percentage can be used to work out the business percentage of your costs. 

2. Claim a fixed rate mileage allowance. The costs of purchase and upkeep are included in the rate. 

For small businesses, the second approach is a simpler option - there are fewer calculations involved, and you don't need to work out your total motor expenses across the year.

However, there are a few points you need to take note of:

• Once you have decided on a method, you need to stick with it until the vehicle is replaced
• If your business' annual turnover exceeds the VAT threshold (set at £90,000 for 2025), you need to use the first method
• You can't use the second method if you bought your vehicle with a capital allowance

Step 3: Apply the correct HMRC mileage rate based on your vehicle type and how many miles you’ve driven.

Step 4: Multiply total business miles with HMRC rate per mile

Example for an Employee Using a Car

Let’s say you’re employed and have used your personal car for 12,000 miles of business travel in the 2025/26 tax year.

• First 10,000 miles: 10,000 × 45p = £4,500
• Remaining 2,000 miles: 2,000 × 25p = £500
• Total claimable amount: £4,500 + £500 = £5,000

If your employer pays less than this, you can claim the difference as tax relief through HMRC using Form P87 or via Self Assessment if you already file a tax return.

Example for a Self-Employed Person Using a Motorcycle

If you're self-employed and used your motorbike for 3,000 business miles:

• 3,000 × 24p = £720
  You can include this amount as an allowable expense when filling in your Self Assessment return.

Want to know how much you can claim for business travel in the 2025/26 tax year? Use our free Mileage Claim Calculator to get an instant estimate based on the number of business miles you’ve driven and the type of vehicle you use. Whether you’re self-employed, a company director, or an employee using your own car for work, this tool makes it quick and simple to work out your potential allowance.

Mileage Allowance for the Self-Employed

As a self-employed person, you can claim back mileage from HMRC if you use your personal vehicle for business trips. This can help lower the amount of profit you’re taxed on.

How to Claim:

You have a couple of options for claiming:

1. A flat rate per mile using HMRC's Approved Mileage Allowance Payments (AMAPs)
2. Your actual vehicle running costs, which you can back up with receipts and records.

Flat Rate Mileage vs Actual Costs

If you decide to go with the flat rate, you need to start using it in the same year you begin using the vehicle for your business. Once you make that choice, you have to stick with it for that particular vehicle.

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Mileage Allowance for Limited Company Directors

If you're a director and you use your personal car for business trips, you can definitely claim mileage but you'll need to do it through your limited company.

Can Directors Claim Mileage?

Absolutely! Directors are considered employees when it comes to taxes. This means you can claim the HMRC mileage rates for using your own vehicle, just like any other employee would.

How to Reimburse Yourself

To get reimbursed, simply submit a mileage claim to your company. They can then pay you back tax-free at HMRC’s approved rates.

What Records Are Needed?

Your accountant or bookkeeper will need:

• Your mileage log or expense report
• A copy of any expense claims you've submitted
• Details of the trips you've claimed

Pro Tip: Use accounting software like FreeAgent or Xero which makes logging mileage a breeze. Plus, GoForma clients get FreeAgent for free, which can save you time and help you stay organised!

Mileage Claims for Employees

When Your Employer Pays You

If your employer pays you the full HMRC rate, you don't require any further action! That payment is tax-free, so there’s no need to worry about including it on your tax return.

When to Claim Tax Relief via P87

If your employer pays you less than the HMRC rate, you can actually claim tax relief for the difference. You have the option to submit your claim online, by post, or even over the phone if it’s under £2,500. However, if you’re claiming more than £2,500 in a year, you’ll need to go through the Self Assessment tax return instead.

For instance:

• Your employer pays 30p per mile
• The HMRC rate is 45p
• You can claim tax relief on the 15p difference for each mile

Over time, this can really add up and help lower your tax bill.

Key Difference

Business Trips You Can Claim Mileage For

• Trips taken to complete work (i.e deliveries)
• Trips between two workplaces for the same job
• Going from an employee's home to a client
• Going to a temporary workplace

What Doesn’t Qualify for Mileage Allowance

• Commuting from home to your regular workplace
• Travel to a permanent workplace, even from a different location
• Driving to a location situated near your workplace (i.e. driving to client's office located just next to your home)
• Trips in which your main purpose isn't business-related (i.e. running a business-related errand during a personal trip)

If you're unsure about what you can claim, it's best to clarify this with one of our accountants who can help with your business accounting.

Keeping a Mileage Log

If you’re driving for work, it’s super important to keep a clear and accurate mileage log. HMRC might ask for your records to back up your mileage claims, whether you’re working for someone else or a self employed individual. A well-maintained log not only helps you claim the right amount but also keeps you from making any mistakes.

What to Record in Your Mileage Log

To ensure your mileage log meets HMRC requirements, make sure to include these details for every trip:

• Date of travel
• Start and end location
• Purpose of the journey
• Number of miles driven
• Vehicle used (if you use more than one)

How to Keep a Mileage Log

You can pick the method that works best for you. Some prefer the classic approach of jotting things down in a notebook, while others prefer the convenience of apps or spreadsheets.

Here are three popular ways to keep track of your mileage:

• Paper Logbook – It’s easy to keep in your car. Just write down each trip as you go along.
• Spreadsheet – Perfect for those who enjoy keeping things digital and organized.
• Mileage Tracking App – These handy apps use GPS to track your journeys and often let you categorize trips as business or personal with just a tap. Some popular options include MileIQ and Autotrip, both of which are compliant with HMRC regulations.

HMRC suggests keeping your mileage records for at least five years after the tax return deadline. This way, they can verify your claims if they decide to review your return later.

The 24-month rule is a guideline from HMRC that helps determine if travel to a workplace qualifies as business mileage. This rule is particularly relevant for those who travel to temporary workplaces, like contractors, agency workers, or employees on short-term assignments.

This rule is important because it affects whether you can claim tax-free mileage for travel to and from a workplace.

How the 24-Month Rule Works

According to HMRC, a workplace is considered temporary if:

• You expect to work there for less than 24 months
• You spend less than 40% of your working hours at that location

If both of these conditions are met, you can claim a mileage allowance for your travel between home and that site, as it’s considered a business journey.

However, if your time at that workplace exceeds 24 months or you find yourself spending more than 40% of your working time there, HMRC will classify it as a permanent workplace. In this scenario, your travel to and from the site is viewed as a regular commute, and you won’t be able to claim mileage for it.

Example of the 24-Month Rule

Imagine you start working at a client’s site for 2 days a week and expect to be there for 18 months. This qualifies as a temporary workplace, so you can claim mileage for your business travel.

But if your contract extends beyond 24 months, or if you begin working there more frequently (over 40% of your time), then the workplace will be considered permanent. At that point, you’ll need to stop claiming business mileage for trips to that location.

HMRC Fuel Advisory Rates are the official rates that businesses rely on to determine how much they should reimburse employees for business travel in a company car. These rates come into play when employees use a vehicle owned by the company and cover the fuel costs themselves.

They’re also handy for reclaiming fuel expenses when a company pays for fuel used during both business and personal trips. In such cases, employees might need to pay back the portion of fuel used for personal travel to avoid any additional tax.

When Should You Use Fuel Advisory Rates?

Fuel Advisory Rates are primarily applicable in two scenarios:

1. An employee uses a company car for business travel and submits a claim for fuel costs.

2. An employer covers fuel for all trips, and the employee reimburses the cost for personal mileage.

These rates are based on the average fuel cost per mile, taking into account the vehicle’s engine size and the type of fuel used, whether it’s petrol, diesel, LPG, or electric.

How Frequently Do the Rates Change?

HMRC reviews and updates these rates quarterly in March, June, September, and December. This ensures that the rates stay aligned with the fluctuations in fuel prices.

You can always check the latest rates on the official HMRC website.

FAQs

Can I claim mileage for commuting?

No, you can’t claim mileage for commuting between your home and your regular workplace. HMRC sees this as a personal journey, not a business one. However, if you travel to a temporary workplace or visit clients as part of your job, you can claim those miles as business travel.

Do I need receipts?

You don’t need fuel receipts when claiming mileage using HMRC’s approved mileage rates, as these rates cover fuel, wear and tear, and running costs. But if you're claiming actual fuel costs instead of mileage rates, then receipts are needed to back up your claim.

What vehicles are eligible for mileage allowance?

You can claim mileage allowance for cars, vans, motorcycles, and bicycles used for business travel. The vehicle must be personally owned or leased by you, not provided by your employer. Company cars have different rules and usually follow fuel rates, not mileage allowance.

Can I claim fuel separately?

You can only claim fuel separately if you're not using HMRC’s mileage allowance rates. If you claim mileage using those rates, fuel is already included. But if you use a company car or claim actual fuel costs, you may claim fuel on its own, as long as you keep receipts and accurate records.

Do electric vehicles qualify?

Yes, electric vehicles qualify for mileage allowance. HMRC sets an advisory electricity rate for fully electric cars, which covers the cost of charging during business travel. You can claim this rate per mile if you use your own electric vehicle for work-related journeys.