Example

Worked example

Tax year: 2026-27; Vehicle: car van; Business miles: 12,000; Employer payment: £4,200. Enter your own details to replace this example.

The approved mileage amount is £6,000.00 for 12000 business miles in 2026/27. The company paid £4,200.00, so there is no taxable excess. The unpaid £1,800.00 is the amount on which the employee may claim Mileage Allowance Relief, subject to their circumstances and records.

HMRC approved amount

£6,000.00

Company mileage payment

£4,200.00

Tax-free payment

£4,200.00

Taxable excess

£0.00

Mileage Allowance Relief shortfall

£1,800.00

• These rates apply when an employee or director uses their own vehicle for qualifying business journeys, not ordinary commuting or fuel in a company vehicle.
• The optional 5p-per-mile payment for carrying another employee on the same business journey is not included in this calculation.
• Mileage Allowance Relief is Income Tax relief on the shortfall, not a repayment of the full shortfall. The tax saved depends on the employee’s tax position.

Sources: GOV.UK: business travel mileage rates and tax rules · GOV.UK: passenger payments