Updated November 2026
Mileage expenses: what can be paid tax-free
When you use your own car for work, your employer can pay you back up to 55p a mile for the first 10,000 business miles in the tax year, then 25p, with no tax to pay. Pay more and the excess is taxed. Pay less and you can claim tax relief on the gap.
Work out your mileage claim
Every forgotten trip is money left unclaimed. Odo records each drive for you automatically →
Uses the HMRC approved mileage allowance payment (AMAP) rates for 2026/27: 55p per mile for the first 10,000 business miles, then 25p.
Mileage reimbursement rates for 2026/27
HMRC calls these payments Mileage Allowance Payments (MAPs). The yearly tax-free limit is the "approved amount": business miles × the rate for the vehicle.
| Vehicle | First 10,000 miles | Above 10,000 miles |
|---|---|---|
| Cars and vans | 55p (45p before 6 April 2026) | 25p |
| Motorcycles | 24p | 24p |
| Bicycles | 20p | 20p |
| Each employee passenger | 5p | 5p |
If an employee uses more than one vehicle in the year, the miles are added together. An electrically assisted pedal bike counts as a bicycle; any other electric bike uses the motorcycle rate. GOV.UK's own example: 12,000 business miles in a car gives an approved amount of £6,000 (10,000 × 55p plus 2,000 × 25p).
Tax and National Insurance use different limits
This is the part most mileage expenses guides skip. There are two separate schemes:
| Income Tax | National Insurance | |
|---|---|---|
| Tax-free limit | Approved amount: 55p then 25p after 10,000 miles | Qualifying amount: 55p for every mile in a car or van |
| Worked out over | The tax year | Each earnings period (pay period) |
| Paid above the limit | Report on a P11D, or add to pay and run it through PAYE | Add the excess to earnings for Class 1 NI (not PAYE tax) |
| Paid below the limit | Employee can claim Mileage Allowance Relief | No relief, and the gap can't be carried forward |
So someone paid 55p a mile all year who drives past 10,000 business miles has taxable pay on the miles above the threshold, but no National Insurance on any of it. Examples, assuming one flat rate all year:
| Paid | Total paid | Approved amount | Income Tax | NI excess (yearly view) |
|---|---|---|---|---|
| 6,000 miles at 45p | £2,700.00 | £3,300.00 | none — you can claim relief on £600.00 | none |
| 6,000 miles at 55p | £3,300.00 | £3,300.00 | none | none |
| 12,000 miles at 55p | £6,600.00 | £6,000.00 | £600.00 taxable | none |
| 12,000 miles at 60p | £7,200.00 | £6,000.00 | £1,200.00 taxable | £600.00 |
The NI column is a yearly simplification. Payroll works it out per pay period, so the real figure depends on when the miles were driven and paid.
Paid less than 55p? Claim the difference
Many employers still reimburse at 45p, or at their own lower rate. Nothing is reported to HMRC in that case, and the employee can claim Mileage Allowance Relief on the unused part of the approved amount, through Self Assessment or a P87. Employers can also report these unused balances to HMRC under the optional MARORS scheme (you contact HMRC to join). Relief is given at your tax rate, so a £600 gap is worth £120 at basic rate.
HMRC wants a mileage log with the reason and start and end postcodes for each journey before it accepts a PAYE claim. See how to claim mileage from HMRC.
Company cars and the self-employed
These rates are for an employee's own vehicle. If the car belongs to the employer, fuel for business trips is reimbursed at the advisory fuel rates, which are much lower and change every quarter. Self-employed people don't get paid mileage expenses by anyone, but can deduct the same pence-per-mile rates as simplified expenses.
This page sums up GOV.UK guidance for employers. It isn't tax or payroll advice.
Stop reconstructing your mileage from memory
Odo logs your drives automatically in the background, you swipe each one business or personal, and it totals your claim at the 2026/27 rates — with a CSV export of every trip: date, reason, distance and the start and end postcodes HMRC asks for in a PAYE claim.