HMRC mileage allowance explained: 55p a mile and what you can claim
The tax-free mileage rates for 2026/27 and 2027/28, how to claim tax relief if your employer pays less, and worked examples.
By the CarComparison team · Updated · How we research
If you use your own car or van for work, HMRC lets your employer pay you up to 55p a mile tax-free for the first 10,000 business miles in a tax year, and 25p a mile after that. Budget 2026 made the 55p rate permanent and raised the rate above 10,000 miles to 35p from 6 April 2027. If your employer pays less than this, you can claim tax relief on the difference.
The rates
| Vehicle | First 10,000 miles | Above 10,000, 2026/27 | Above 10,000, from 2027/28 |
|---|---|---|---|
| Car or van | 55p | 25p | 35p |
| Motorcycle | 24p | 24p | 24p |
| Bicycle | 20p | 20p | 20p |
Your employer can also pay 5p a mile tax-free for each colleague you carry on a work journey. The 10,000-mile threshold counts all your business miles in the tax year (6 April to 5 April).
What counts as business miles
Journeys you make for work: visiting clients or customers, travelling between sites, or going to a temporary workplace such as a training course or a project that will last less than two years. Your normal commute from home to your usual workplace doesn't count, even if your employer pays for it.
If your employer pays less: Mileage Allowance Relief
Many employers pay less than 55p. You can claim tax relief on the gap, called Mileage Allowance Relief. Say you drive 6,000 business miles and your employer pays 30p a mile:
- HMRC's rate allows £3,300 (6,000 × 55p).
- Your employer pays £1,800, so the gap is £1,500.
- You get tax relief on that gap: £300 back as a basic-rate taxpayer, or £600 as a higher-rate taxpayer.
Claim online on GOV.UK, or through your Self Assessment return if you already file one. You can claim for the previous four tax years. Keep a log of each journey: date, where you went, why and the miles.
High mileage: what the Budget 2026 change is worth
At 15,000 business miles a year, the tax-free amount is £6,750 in 2026/27. From 2027/28, with 35p above 10,000 miles, it rises to £7,250, £500 more. If your employer pays the full rate, that's £500 more tax-free; if it doesn't, it's £500 more you can claim relief on.
If you're self-employed
Sole traders and partners can use the same rates as "simplified expenses", deducting 55p a mile (then 25p) from profits instead of working out the real cost of fuel, insurance, servicing and depreciation. The deduction saves income tax and Class 4 National Insurance (6% on most profits). Once you choose a method for a vehicle you must stick with it while you use that vehicle. Our self-employed vehicle expenses calculator compares the flat rate with your actual costs.
Company cars are different
These rates are for your own vehicle. If you drive a company car, your employer can reimburse fuel for business journeys at HMRC's advisory fuel rates instead, which are lower and change every quarter.