HMRC's Approved Mileage Allowance Payment rates are 45p per mile for the first 10,000 business miles per tax year and 25p per mile thereafter for cars. Motorcycle rate is 24p per mile; bicycle rate is 20p per mile. Payments within these rates are tax and NIC-free for employees. Amounts above the AMAP rate are taxable. Employees whose employer pays below the AMAP rate can claim Mileage Allowance Relief through self-assessment.
Last reviewed May 2026
HMRC mileage rates sit at the centre of one of the most commonly mis-administered areas of UK employment tax. The rules appear simple - a flat pence-per-mile rate, applied to business journeys - but the detail generates consistent compliance failures: commuting journeys incorrectly claimed as business travel, passenger rates missed, rates applied to the wrong vehicle type, and mileage logs that fail to record the business purpose of each journey. This guide covers the approved rates, the claiming methods available to employers and employees, and the software options that make accurate administration manageable.
HMRC Approved Mileage Allowance Payment Rates
The Approved Mileage Allowance Payment framework is set out in Chapter 2 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 and the associated HMRC guidance published on gov.uk. The rates have remained unchanged since April 2011, which means their real value has eroded significantly against fuel cost inflation - a point of ongoing debate between employer organisations and HMRC, but not one that changes the applicable rates.
For cars and vans, the AMAP rate is 45p per mile for the first 10,000 business miles in a tax year (6 April to 5 April), and 25p per mile for each business mile above 10,000. For motorcycles, the rate is 24p per mile with no threshold distinction. For bicycles, the rate is 20p per mile. An additional 5p per mile per passenger is approved where a fellow employee is carried on a business journey - this passenger payment is separate from and in addition to the vehicle rate.
Payments made within these rates are entirely exempt from income tax and National Insurance contributions - for both the employer and the employee. The employer pays no Class 1 NIC; the employee pays no income tax. This exemption is automatic where the AMAP rate is applied correctly; no dispensation application or PAYE Settlement Agreement is required. The HMRC mileage allowance guidance on gov.uk is the primary reference for employers configuring mileage policies.
A critical definitional point: business mileage means travel that is wholly and exclusively for business purposes. The ordinary commute from home to a permanent workplace is not business mileage. A journey from a permanent workplace to a client site is business mileage. A journey from home directly to a temporary workplace (where the employee is attending for a limited duration) is generally business mileage - but this classification requires careful application of HMRC's temporary workplace rules under section 339 ITEPA 2003.
What Happens When Employers Pay Above or Below the AMAP Rate
The AMAP rate is a ceiling for tax-free reimbursement, not a compulsory payment level. Employers can pay above or below it, with different tax consequences in each case.
Where an employer pays above the AMAP rate - say, 55p per mile - the excess above 45p (or 25p above the threshold) is treated as earnings. It must be reported through PAYE, subjected to income tax and Class 1 NIC, and included in the employee's payslip. This is frequently overlooked by businesses that set mileage rates based on AA or RAC motoring cost estimates without checking the AMAP ceiling.
Where an employer pays below the AMAP rate - or pays nothing at all - the employee has a shortfall. They can claim Mileage Allowance Relief (MAR) through self-assessment or, if they are not otherwise required to complete a self-assessment return, through a form P87 submitted to HMRC. MAR gives tax relief on the difference between what the employer paid and the AMAP rate. A basic-rate taxpayer claiming MAR on a 10p per mile shortfall over 5,000 miles would receive 20% relief on £500, resulting in a £100 tax refund.
Employees who use their own vehicle for business and receive no mileage allowance from their employer can claim the full AMAP rate as MAR - potentially recovering significant tax, particularly for higher-rate taxpayers with high business mileage. The Income Tax (Earnings and Pensions) Act 2003 at sections 229-232 sets out the MAR calculation framework in full.
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Mileage Rate Comparison: AMAP vs Advisory Fuel Rates
HMRC operates two distinct mileage rate frameworks that are frequently confused: the AMAP rates (for employees using their own vehicles) and the Advisory Fuel Rates (for employees using company cars). These serve entirely different purposes and must not be conflated.
Advisory Fuel Rates (AFRs) apply where the employer has provided a company car and the employee uses it for business travel. The employer can reimburse the fuel cost of that business travel at the AFR without a benefit in kind arising. AFRs are reviewed quarterly by HMRC and vary by engine size and fuel type. As of the 2025-26 tax year, petrol car rates range from approximately 13p per mile (engine under 1400cc) to 24p per mile (engine over 2000cc). Diesel rates are slightly lower; electric vehicle rates are set separately (currently 7p per mile for company electric vehicles, reviewed quarterly).
The practical distinction: if an employee drives their own car on business, use AMAP rates. If an employee drives a company car on business, use Advisory Fuel Rates (for fuel reimbursement only - capital cost is handled via the company car benefit in kind). Applying AMAP rates to company car mileage is an error that can trigger HMRC enquiries.
| Vehicle/Situation | Rate Framework | Rate (2025-26) | Tax/NIC Status |
|---|---|---|---|
| Own car, first 10,000 miles | AMAP | 45p/mile | Tax and NIC free |
| Own car, above 10,000 miles | AMAP | 25p/mile | Tax and NIC free |
| Own motorcycle | AMAP | 24p/mile | Tax and NIC free |
| Own bicycle | AMAP | 20p/mile | Tax and NIC free |
| Passenger (employee) | AMAP supplement | 5p/mile per passenger | Tax and NIC free |
| Company car, petrol (1401-2000cc) | Advisory Fuel Rate | ~16p/mile | Tax and NIC free (within AFR) |
| Company electric vehicle | Advisory Fuel Rate | 7p/mile | Tax and NIC free (within AFR) |
Mileage Record-Keeping: What HMRC Requires
The most common mileage compliance failure is not applying the wrong rate - it is maintaining an inadequate mileage log. HMRC requires a contemporaneous record of each business journey that is sufficient to demonstrate the journey had a business purpose. The record must show the date, the start and end location, the distance, and the business reason for the journey.
A total monthly mileage figure - "800 miles, business travel" - does not satisfy this requirement. HMRC inspectors reviewing mileage claims will ask for journey-level records and will disallow claims where the business purpose of individual journeys cannot be demonstrated. In a compliance check covering three years of mileage payments, the exposure from inadequate records can be substantial: the disallowed payments become employment income subject to back-tax and NIC, plus interest and potentially penalties.
The minimum viable mileage log for HMRC purposes is a spreadsheet recording: date, start point, destination, purpose (client name or meeting type is sufficient), miles, and rate applied. Most businesses maintain this level of detail already. The upgrade that expense management software provides is capturing this data at the point of travel - via a mobile app with GPS journey logging - rather than reconstructing it at the end of the month.
For businesses using expense management platforms, see the travel expense management guide for subsistence and per diem record-keeping alongside mileage, and the best expense management software buyer guide for platform comparisons including mileage module quality.
Software for Mileage Tracking and AMAP Compliance
Expense management platforms handle mileage in one of two ways: manual entry (employee logs start, end, and miles; platform calculates the AMAP reimbursement) or GPS-based journey tracking (the mobile app records the journey in real time using device location data). GPS tracking provides a more defensible audit trail but raises employee data privacy considerations - recording location data continuously requires a lawful basis under UK GDPR, and employers should document this in their data processing records.
Platforms with strong mileage modules include Webexpenses (HMRC AMAP rates built in, P11D-ready reporting, configurable for multi-vehicle types), Expensify (manual mileage entry with AMAP rate calculation, straightforward and widely used), and TravelPerk's mileage module for businesses with integrated travel management. Standalone mileage tracking apps including MileIQ (Microsoft) and Driversnote integrate with accounting and expense platforms and provide GPS journey logging with business/personal journey classification.
The key selection criterion for mileage software is whether the platform correctly handles the 10,000-mile threshold switch - automatically applying 25p rather than 45p once an employee exceeds 10,000 business miles in the tax year. This threshold resets on 6 April each year. Platforms that do not track cumulative mileage per employee per tax year will consistently over-reimburse high-mileage employees, creating a PAYE liability for the employer.
FAQ
Has HMRC increased mileage rates for 2025-26?
No. The AMAP rates of 45p/25p for cars, 24p for motorcycles, and 20p for bicycles have remained unchanged since April 2011. HMRC reviews Advisory Fuel Rates quarterly - these apply to company car fuel reimbursement, not to employees using their own vehicles. There have been sustained calls from motoring organisations and employer groups to increase AMAP rates to reflect fuel cost inflation, but no change has been announced as of May 2026.
Can I claim mileage to and from my home office?
Travel from a home office that is a genuine place of work (not merely a convenient base) to a client or temporary workplace is generally claimable as business mileage. HMRC applies the temporary workplace rules: if you are attending a location for a limited duration or purpose, it qualifies. However, if your home is not your genuine workplace - if you are simply choosing to work from home rather than attending your employer's permanent premises - travel to client sites may be treated differently. The specifics depend on individual circumstances and should be reviewed with a tax adviser.
Do AMAP rates apply to electric vehicles?
Yes. Employees using their own electric vehicle for business travel can claim AMAP at 45p/25p, the same as petrol or diesel cars. The AMAP rate is not adjusted for fuel type. This is often advantageous for EV owners whose actual fuel cost (electricity) is considerably below 45p per mile. For company-provided electric vehicles, the Advisory Fuel Rate of 7p per mile applies for fuel cost reimbursement purposes.
What is Mileage Allowance Relief and how do I claim it?
Mileage Allowance Relief is a tax relief available to employees whose employer pays less than the AMAP rate per mile (or nothing at all). The relief is calculated on the difference between the AMAP rate and the amount actually paid, multiplied by business miles driven. Employees in self-assessment claim MAR on their tax return. Employees not in self-assessment submit form P87 to HMRC. The relief is worth the employee's marginal tax rate applied to the shortfall amount.
Do I need to report mileage payments on a P11D?
Mileage payments made at or below the AMAP rate are exempt from P11D reporting - no benefit in kind arises. Payments above the AMAP rate are treated as earnings and must be processed through PAYE rather than reported on a P11D. Where an employer has a dispensation or PAYE Settlement Agreement in place that covers mileage, the specific reporting obligations in that agreement take precedence.
How We Verified
This article draws on HMRC's published guidance on mileage allowance payments and Advisory Fuel Rates on gov.uk, the Income Tax (Earnings and Pensions) Act 2003 at sections 229-236 as published on legislation.gov.uk, and HMRC's Employment Income Manual. Advisory Fuel Rate figures referenced are subject to quarterly revision by HMRC; readers should verify current rates on gov.uk before applying them. AMAP rates are statutory and reflect the position as of May 2026.
