Free tool
Mileage allowance calculator
The mileage allowance calculator works out how much a company can pay tax-free when a director or employee uses their own vehicle for business travel, then identifies any taxable excess or unpaid amount that may qualify for Mileage Allowance Relief.
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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
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What are the approved mileage allowance rates?
For 2025/26, cars and vans use 45p for the first 10,000 business miles and 25p afterwards. From 6 April 2026 the first rate is 55p, while 25p still applies afterwards. Motorcycles use 24p and bicycles 20p for every business mile (GOV.UK mileage rules).
| Vehicle | 2025/26 | 2026/27 | After 10,000 |
|---|---|---|---|
| Car or van | 45p | 55p | 25p |
| Motorcycle | 24p | 24p | 24p |
| Bicycle | 20p | 20p | 20p |
The calculator does not include the optional 5p-per-mile payment for carrying another employee on the same business journey (GOV.UK passenger payments).
How does the mileage allowance calculator work?
Take the calculator’s worked example: 12,000 car miles in 2026/27 produce an approved amount of £6,000.00. The company paid £4,200.00, leaving £1,800.00 on which the director may claim Income Tax relief, rather than receiving that whole shortfall from HMRC.
What counts as a business mile?
A business mile is travel an employee must make in performing their duties, or travel to a temporary workplace. Ordinary travel between home and a permanent workplace is commuting and does not qualify. Keep a contemporaneous mileage log with dates, start and destination, business purpose, distance and the vehicle used.
Can I use these rates for a company vehicle?
No. Approved mileage allowance payments apply when the director or employee uses their own car, van, motorcycle or bicycle. Different advisory rates concern fuel or electricity for company vehicles. If the company owns or leases the vehicle, do not use this calculator to decide the reimbursement or any benefit-in-kind position.
How is Mileage Allowance Relief claimed?
Where the company pays less than the approved amount, the employee may claim Income Tax relief on the difference. The relief is not the difference itself: it reduces taxable income, so its value depends on the employee’s tax rate. Claims may be made through Self Assessment or HMRC’s expenses process.
For wider company costs, see the use of home as office calculator and the Corporation Tax calculator.
This calculator provides general information, not tax advice.
Which rules does this calculator follow?
Every figure comes from the rules HMRC and Companies House publish on GOV.UK, and from the legislation behind them. The links below go to the pages we checked when we last reviewed this calculator, so you can read each rule in full and check that it applies to your company.
Frequently asked questions
What is the mileage rate for a director’s own car?
For 2025/26 the approved rate is 45p per business mile for the first 10,000 miles and 25p after that. From 6 April 2026 the first rate rises to 55p, with 25p after 10,000. A director is treated like another employee for these mileage rules when using their own vehicle.
Do electric cars use a different mileage allowance rate?
No. An employee-owned electric or hybrid car uses the same approved mileage allowance payment rates as another car. These are not the advisory electricity or fuel rates used for company cars. The journey must still be a qualifying business journey, and the employee should keep a mileage log supporting the distance and purpose.
Is mileage allowance tax-free?
A company can generally pay up to the approved amount without Income Tax. If it pays more, the excess is taxable and must be dealt with under the reporting and payroll rules. If it pays less, the employee may claim Mileage Allowance Relief on the shortfall, provided the journeys and records qualify.
Can I claim mileage from home to work?
Ordinary commuting between home and a permanent workplace does not count as business travel. Travel in performing the job, or to a temporary workplace, may qualify. Whether a place is permanent or temporary depends on the facts and HMRC travel rules, so keep the destination and business purpose for each journey.
What records should I keep for a mileage claim?
Keep the date of every journey, where it started and ended, why it was for business, the business miles and which vehicle was used. Retain the company’s payment record as well. A reliable contemporaneous log supports both the tax-free company payment and any Mileage Allowance Relief claimed by the employee.
Does the 10,000-mile limit restart for each car?
No. Business mileage in all cars and vans used by the employee for the same employment is combined for the tax year. Changing cars does not create another first 10,000-mile band. Motorcycles and bicycles are separate vehicle categories and use their own flat rates for every qualifying business mile.
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Last reviewed . This calculator gives general guidance, not tax advice.
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