Mileage Allowance Rates 2026/27: How to Claim Business Mileage in the UK

Claiming mileage allowance is one of the most common tax relief questions in the UK, especially for employees who use their own car, van, motorcycle, or bicycle for business travel.

For the 2026/27 tax year, HMRC’s approved mileage allowance rates remain unchanged from previous years. However, how you claim, and what you can claim, depends on your employment status, whether your employer reimburses you, and whether you use your own vehicle or a company car.

Updated for 2026/27: HMRC’s approved mileage rates remain 45p per mile for the first 10,000 business miles and 25p per mile after that for cars and vans. Employees who are reimbursed below these rates may be able to claim Mileage Allowance Relief from HMRC.

HM Treasury announced in March 2026 that approved mileage allowance payment rates will be reviewed ahead of a future Budget. For now, the current HMRC mileage rates continue to apply until any changes are officially confirmed.

In this guide, we explain everything you need to know about mileage allowances, how to calculate claims, and how to stay compliant with HMRC rules. 

How Much Can You Claim for Business Mileage? 

If you use your own car for business journeys, you can claim a tax-free mileage allowance based on HMRC’s approved rates. These rates are currently: 

Vehicle	First 10,000 business miles	Business miles above 10,000
Cars and vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

These rates are designed to cover the running costs of your vehicle, including fuel, insurance, servicing, and wear and tear. 

If your employer reimburses you at a lower rate than HMRC’s approved rate, you may be able to claim tax relief on the difference. This is commonly known as Mileage Allowance Relief.

What Counts as Business Mileage?

Business mileage usually includes journeys made wholly and exclusively for work, such as travelling to client meetings, visiting temporary workplaces, attending training courses, travelling between business locations, or making business-related errands.

You usually cannot claim mileage for ordinary commuting between your home and your permanent workplace.

For self-employed individuals, journeys must be directly related to the business to qualify as allowable expenses.

Can You Claim VAT on Mileage?

VAT-registered businesses may be able to reclaim VAT on the fuel element of mileage payments, not the full mileage allowance.

This means VAT cannot be reclaimed on the full 45p or 25p per mile HMRC mileage rate. Instead, the VAT claim is based only on the fuel portion of the mileage payment, usually using HMRC Advisory Fuel Rates (AFRs).

To reclaim VAT on mileage, you should:

• identify the correct Advisory Fuel Rate for the vehicle
• calculate the VAT included in the fuel element
• keep VAT receipts showing enough fuel was purchased to cover the business mileage claimed

Example of a VAT Mileage Claim

If the fuel element is 12p per mile, the VAT reclaimable would be:

$12p \times \frac{1}{6} = 2p$12p×61​=2p

This means the VAT reclaimable is 2p per mile.

For example, if you travelled 1,000 business miles, the VAT reclaim would be:

$1000 \times 2p = £20$1000×2p=£20

So, the total VAT reclaim would be £20.

To support the claim, you must keep VAT receipts showing that sufficient fuel was purchased to cover the business mileage claimed.

Because HMRC Advisory Fuel Rates can change, VAT-registered businesses should always check the latest HMRC guidance before calculating a VAT mileage claim.

Car Sharing for Business Travel 

If you travel with colleagues from the same business, the driver can claim an additional 5p per mile for each eligible passenger. This applies only if the passengers are also employees or officers of the same business. 

For instance, if you drive with two colleagues to a business event, you could claim 55p per mile, that’s 45p for the standard rate, plus 5p each for two passengers. 

What Are the HMRC Mileage Allowance Rates? 

The HMRC-approved mileage rates apply to employees using their personal vehicles for business purposes. You cannot claim additional running costs (such as MOTs or repairs) separately, as these are already factored into the mileage rate. 

If you use a company car, you can only claim tax relief or reimbursement on fuel or electricity used for business travel, and accurate mileage and fuel records must be kept. Company car claims usually follow HMRC’s Advisory Fuel Rates, rather than the standard 45p or 25p mileage allowance.

Employers may reimburse mileage through Mileage Allowance Payments, also known as MAPs. If the payments are below the approved HMRC rate, the employee may be able to claim Mileage Allowance Relief on the difference.

Whether you call it a mileage allowance claim, Mileage Allowance Relief, or an HMRC mileage claim, the key point is that only qualifying business journeys should be included.

Mileage Allowance for the Self-Employed 

If you’re self-employed, you can choose to use simplified expenses, which allow you to claim: 

• 45p per mile for the first 10,000 miles 
• 25p per mile for any miles beyond this 

For self-employed people using simplified expenses, the standard mileage rates are commonly used for cars and vans. If you use a motorcycle or bicycle, check the relevant HMRC guidance before claiming, as the rules can differ depending on your situation.

Self-employed people usually claim mileage as a business expense through their Self Assessment tax return. This is slightly different from Mileage Allowance Relief, which normally applies to employees who are not fully reimbursed by their employer.

You cannot use simplified mileage if you’ve already claimed capital allowances on the same vehicle. In that case, you must calculate your actual costs and claim a proportion based on business use.

How to Claim Mileage Allowance 

If you’re self-employed and using simplified expenses, simply multiply your business mileage by the relevant rate and include this figure in your Self Assessment tax return. 

If you do not use the simplified method, you’ll need to work out the total cost of running the vehicle (including insurance, fuel, tax, and maintenance), and then claim a percentage based on the proportion of miles driven for business. 

For employees, the process is slightly different. You need to calculate your business mileage and compare it with any reimbursement from your employer.

Example: 

Detail	Amount
Total business miles	11,000
First 10,000 miles at 45p	£4,500
Remaining 1,000 miles at 25p	£250
Total approved mileage amount	£4,750
Employer reimbursed	£2,000
Mileage shortfall	£2,750
Tax relief at 20%	£550

The £2,750 is the mileage shortfall, not the refund itself. A basic-rate taxpayer would usually receive 20% tax relief, which is £550. A higher-rate taxpayer may receive more depending on their tax position.

If you do not normally complete a tax return, you may be able to claim employment expenses using HMRC’s P87 process. If you already complete Self Assessment, you can usually include the mileage claim in your tax return.

This calculation can vary depending on your tax band, so it’s worth confirming with an accountant.

Can You Claim VAT on Mileage? 

VAT-registered businesses may be able to reclaim VAT on the fuel element of mileage payments, not the full mileage allowance.

This means you cannot reclaim VAT on the full 45p or 25p per mile rate. Instead, VAT is calculated only on the fuel portion of the mileage claim, usually using HMRC’s Advisory Fuel Rates.

To reclaim VAT on mileage, you should:

• identify the correct Advisory Fuel Rate for the vehicle
• calculate the VAT included in the fuel element
• keep VAT receipts showing enough fuel was purchased to cover the business mileage claimed

For example, if the fuel element is 12p per mile, the VAT reclaimable is:

12p × 1/6 = 2p per mile

So, for 1,000 business miles, the VAT reclaimable would be:

1,000 × 2p = £20

To support the claim, you must keep VAT receipts showing that sufficient fuel was bought to cover the mileage claimed.

Because Advisory Fuel Rates can change, VAT-registered businesses should always check the latest HMRC rates before calculating a mileage VAT claim.

Claiming a Van as a Business Expense 

If you are self-employed and use a van for business, you may be able to claim either simplified mileage or actual running costs, depending on your accounting method and whether capital allowances have already been claimed. This can affect your tax position, so it is worth checking with an accountant before submitting your return.

Is There a Simpler Way to Track and Claim Mileage? 

Tracking mileage manually can be time-consuming, especially if you drive frequently for work. To make things easier, consider keeping a dedicated logbook or using a mileage-tracking app that records business journeys accurately.

Accurate mileage records should include:

• Date of journey
• Start and end location
• Postcodes, where possible
• Number of miles
• Purpose of the trip
• Amount reimbursed by your employer
• Vehicle used

This not only helps when claiming tax relief but also serves as evidence should HMRC request a review.

Not sure which method applies to you?

Mileage claims can differ for directors, contractors, and sole traders. Speaking to a qualified UK tax accountant can help you avoid mistakes and maximise your claim.

Contact us today for tailored advice or a free initial consultation.