Car tax and mileage allowance UK 2026: how mileage allowance payments from employers affect your tax. AMAP rates, whether mileage is taxable and how HMRC-approved mileage rates work.
Understanding Mileage Allowance Tax UK 2026
Vehicle Excise Duty (VED) rules in the UK cover a wide range of vehicle types and uses. Understanding how road tax applies to your specific situation is essential for staying compliant with DVLA requirements and avoiding fines.
VED Rates and Classifications
UK road tax is calculated based on vehicle type, CO2 emissions and usage. The following table summarises key rates for mileage allowance tax uk 2026:
| Vehicle Type | VED Class | Notes | Annual Cost |
|---|---|---|---|
| Car - first 10,000 miles | 45p per mile | Tax-free | £0 tax |
| Car - after 10,000 miles | 25p per mile | Tax-free | £0 tax |
| Motorcycle | 24p per mile | Tax-free | £0 tax |
How Road Tax Works for This Vehicle Type
The Approved Mileage Allowance Payment (AMAP) is the amount employers can pay employees for business driving without triggering a tax liability. For cars, the AMAP rate is 45p per mile for the first 10,000 business miles per year. Any payment above this rate is taxable as income. After 10,000 miles, the rate drops to 25p per mile, with amounts above that being taxable.
Key Takeaways
- 10,000-Mile Threshold: AMAP payments are tax-free up to 10,000 business miles per year
- Above AMAP Taxable: Any mileage payment above HMRC rates counts as taxable income
Note: The mileage allowance is separate from road tax. You continue to pay road tax on your vehicle regardless of whether you receive mileage payments. Road tax is a vehicle cost, not a mileage-related deduction.
For more information about UK vehicle tax and to calculate your specific road tax obligations, use our free car tax calculator covering all UK vehicle types and emissions bands.