Mileage allowance: HMRC mileage rates 2026

Mileage claims should be straightforward – but between HMRC rules, different vehicle types, changing rates and tax implications, they often end up being anything but.

If you or your employees use personal vehicles for work, understanding HMRC’s mileage allowance is essential. Get it right, and you can reimburse travel costs tax-free, stay compliant, and avoid overpaying tax. Get it wrong, and you risk frustrated employees, inaccurate reimbursements, or unexpected tax bills.

We’ll break down everything you need to know about HMRC mileage rates for 2025 to 2026 – from what counts as legitimate business travel, to how much you can claim per mile for cars, vans, motorcycles, bikes and electric vehicles. We’ll also cover passenger allowances, company car fuel rates and how to claim back tax relief if your employer’s mileage rate falls short.

Key takeaways:

• HMRC mileage allowance lets businesses reimburse employees tax-free for using their own vehicles for work.
• Rates vary by vehicle type, with cars and vans paid at 45p per mile (up to 10,000 miles) and 25p thereafter in 2025 to 2026.
• Only genuine business travel qualifies – commuting and mostly personal trips can’t be claimed.
• Extra allowances apply, including 5p per mile for carrying colleagues and separate rules for company cars.
• Paying less than the HMRC rate doesn’t mean losing out; employees may still be able to claim tax relief from HMRC.

What is HMRC’s mileage allowance?

In the UK, HMRC’s (HM Revenue and Customs) mileage allowance is a tax-free allowance employers can pay to employees using their own vehicles for work purposes.

The mileage allowance enables employees to claim back vehicle expenses when they’re driven for the purpose of business.

In theory, this rebate goes beyond the cost of petrol – towards covering road tax, insurance and weathering, for example. But calculating the individual tyre wear and tear on every single vehicle is simply unrealistic, especially for growing teams.

Instead, HMRC works with standardised pence per mile expenses, known as ‘Mileage Allowance Payments’ (MAPs). This business mileage deduction applies to any employee that operates their vehicle for business use.

The purpose of the reimbursement is to align with current business tax regulations.

Generally, business costs are not subject to tax, and are able to be deducted against revenue to ensure you’re not paying too much tax. This means when business-related vehicle expenses are incurred from a personal account, the mileage allowance ensures they’re also tax-exempt.

You might also be interested in: All about HMRC uniform tax

What can be reimbursed by mileage allowance?

So, what does HMRC mileage allowance cover exactly? Only certain actions are actually deemed valid business expense activities.

Here are some examples of trips that CAN be reimbursed by mileage allowance:

• Travelling somewhere outside of the usual office space to do your job
• Travelling between office spaces
• Driving to client offices
• Driving to a temporary location (such as a conference) to conduct business
• A job cannot be done without the trip being made (e.g. if a colleague has broken down on the way to work and has to be picked up by another colleague)

Here are some examples of things that CANNOT be reimbursed by mileage allowance:

• The daily commute to a permanent office
• A trip that is extremely close (while there isn’t an official HMRC definition, the generally-accepted distance is 10 miles)
• A trip that is primarily personal with a minority of work-related stops
• Toll payments or parking tickets

Remember, this list isn’t exhaustive. If in doubt, take a look at HMRC’s website.

What is the mileage rate for 2025 to 2026 in the UK?

The business mileage rate for 2025 to 2026 is set by HMRC. The difference between rates depends on the type of vehicle used:

Let’s break each one down individually.

Cars and vans mileage rate

The HMRC-approved mileage rate for cars and vans is set at £0.45 per mile when driven under 10,000 miles per year. If the vehicle is used more, the employee receives £0.25 per mile above that 10,000 threshold.

Let’s say that in the last year, you’ve driven 16,000 miles for work purposes. For those first 10,000 miles, you’re eligible to receive 45p per mile:

£0.45 x 10,000 = £4,500

Then, you drove 6,000 extra miles, which means you’re eligible to receive 25p per mile:

£0.25 x 6,000 = £1,500.

Therefore, your reimbursement will total £6,000.

The government advises that you consider hybrid cars as standard for mileage rate purposes, with the same standard rates.

Electric car mileage rates sit at £0.07 per mile for home charging and £0.14 per mile for public charging. Importantly, there is no limit. Even after 10,000 miles per year are driven, the rate remains consistent.

Motorcycles mileage rate

If your employee drives a motorcycle, they’re eligible to receive £0.24 per mile when driving for business purposes. Unlike cars and vans, motorcycles are not subjected to the 10,000 miles limit, which means that going above this threshold does not change the 24p rate.

Let’s say you’ve driven 2,000 miles for work this year on your motorbike:

£0.24 x 2000 = £480 in tax-free reimbursement.

Bicycles mileage rate

Those who ride bicycles to work might not be paying for fuel, but still incur costs such as insurance, as well as general wear and tear during use. The government recognises this and awards £0.20 per mile for an unlimited amount of business-related mileage.

So, let’s say you’ve cycled 300 miles for eligible business trips this year:

£0.20 x 300 = £60 to receive tax-free reimbursement.

Plus, riding a bike to work is not only a great way to improve your physical and mental health, but also the health of the planet – not a bad bonus, in our eyes.

How are mileage tax rates calculated?

Each employee is eligible for an approved amount of mileage expenses reimbursement per tax year, calculated by the number of miles driven (the MAP).

Since most businesses operate by reimbursing employees on a monthly basis, companies are required to keep track of total mileage over the course of the tax year. In the end, the company must compare the actual amount paid to the MAP. If the employee receives any amount above the allowance, it may then be subject to tax.

Once you’ve used a mileage calculator, HMRC does not require any information or reporting as long as you do not go over the approved MAP amount.

Tax relief claims per qualifying passenger

Did you know that drivers who carry their colleagues as passengers are entitled to a further mileage allowance?

Though it’s not a company car, mileage rates increase by £0.05 per mile when a fellow employee is also travelling for business purposes within the same vehicle.

For example, let’s say Jane drives her colleague Andy for 60 business miles per month. Over twelve months, this totals to 720 miles per year:

£0.05 x 7200 = £36 extra that Jane is eligible to receive tax-free.

The passenger part of this MAP scheme also falls under the approved amount and does not require additional reporting to HMRC.

Carpool, anyone?

HMRC advisory fuel rates for company cars 2025 to 2026

As it happens, the mileage allowance only applies to employee-owned vehicles, with cars owned by the company under totally different regulations. Known as HMRC advisory fuel rates, the company car category is used for two very specific circumstances:

• When employees require reimbursement for costs relating to business travel in a company car (such as paying for fuel on their personal credit card)
  
  
• When employees have used the company car for personal travel and owe the business

Company car fuel rates are slightly more difficult to calculate than standard HMRC mileage allowances and are reviewed every three months. They depend on actual fuel rates, so they’re likely to change as this year progresses. Businesses can only rely on the previous rates for up to one month before switching to current rates.

As you can see below, HMRC fuel rates are calculated with a number of factors in mind, such as:

• Engine size
• Mean and adjusted miles per gallon (determined from manufacturer information)
• Current fuel prices
• Calculated and rounded (actual) rate per mile

Similar to the mileage allowance, hybrid cars are treated as either petrol or diesel cars for advisory fuel rates. However, fully electric vehicles are reimbursed at £0.07 per mile for home charging and £0.14 for public charging.

The following tables are taken from HMRC and are applicable from 21 November 2025. They're provided with the purpose of breaking down exactly why fuel rates are at their current numbers:

Petrol

Diesel

LPG (Liquefied Petroleum Gas)

In reality, what matters is only the size of the vehicle’s engine and its equivalent price per mile. Let’s go through an example where your business owns a company car.

The car has a 1000cc petrol engine and is driven by employees who pay for fuel for 2000 miles per year. However, the same employee uses the company car for personal use for 500 miles per year.

The advisory fuel rate (from November 2025) for petrol cars with engines up to 1400cc is £0.12 per mile.

12p x 2000 miles = £240

 

12p x 500 miles = £60

Therefore, £240 is the total amount you can claim from HMRC through the fuel advisory for 2025 to 2026. But your company is also eligible to recoup £60 from the employee.

Electric

Got questions? We’ve got answers!

Can I use a different mileage allowance than the standard?

Yes, sometimes it’s helpful for businesses to set a rate that’s higher or lower than the government mileage rate.

In the case of a higher rate, any amount above the MAP is eligible for tax. In the case of a lower rate, the employees are still eligible for tax relief but must claim it themselves.

For example, let’s say Martin’s company reimburses £0.20 per mile and he drives 300 business miles per year. He would receive just £60, while the MAP is £135. This makes Martin eligible to claim an extra £75 in tax relief from the government.

How do I claim mileage back from HMRC?

After using HMRC mileage claim calculator, you may have realised that your company provides a lower rate than the MAP allows.

In order to claim the rest of your tax relief, ensure you keep records and calculate the exact difference between the expected and actual totals. A good way to do this is to use a mileage tracker.

Claims under £2,500 can be made using HMRC form P87. Alternatively, claims over this amount will have to be made through self-assessment.

If you’re self-employed, claiming mileage on taxes in 2025 to 2026 doesn’t have to be complicated. The same rules apply, with HMRC advisory fuel rates appropriate if you founded a corporation and the car is not owned personally.

How do I best reimburse my employees in 2026?

With the mileage allowance being pence per mile expenses, it can become incredibly tedious to manually track and calculate the individual mileage allowance per employee. Plus, SMEs with company cars have mileage reimbursements to consider. Talk about time better spent on actually growing the business!

Fortunately, software makes it simple. Pleo’s Reimbursements feature calculates the exact mileage for every journey based on start and end data, and automatically works with HMRC figures to calculate the mileage tax relief on each journey. Riddled with regulatory features, it’s easy to see why business fuel cards are the choice of companies across the country.

So, strap in and help fuel your business with a demo today.