The HMRC mileage allowance system provides the framework through which UK employees and employers handle the financial aspects of business-related driving. Whether you are reimbursed by your employer, claim back expenses, or use your own vehicle for business purposes, the Approved Mileage Allowance Payment rates determine what can be paid tax-free. The United Kingdom operates one of the most comprehensive vehicle taxation systems in the world. From the moment a car is first registered to the day it reaches historic vehicle status, every stage of ownership carries distinct tax implications. Understanding these Mileage Allowance rules in 2026 enables drivers to budget accurately, identify legitimate savings opportunities, and maintain full legal compliance throughout their vehicle ownership journey. ## Understanding Mileage Allowance in the UK Context The Approved Mileage Allowance Payment system was introduced to simplify the taxation of business mileage reimbursements. Rather than requiring detailed expense claims for every journey, HMRC sets fixed rates that employers can pay without the employee incurring a tax liability. Any payment above the AMAP rate becomes taxable income. ## Current Mileage Allowance Rates and Regulations The current AMAP rate for cars is 45 pence per business mile for the first 10,000 miles in a tax year, reducing to 25 pence per mile thereafter. This reduction reflects the assumption that drivers with very high annual mileages incur lower marginal costs per mile due to spreading fixed vehicle costs over a larger base. ### Advisory Fuel Rates for Company Cars Advisory Fuel Rates are separate from AMAP and apply specifically when an employer provides fuel for a company car and needs to calculate reimbursement for business-only fuel, or when an employee must repay the employer for private fuel included in a company car arrangement. The current AFR for a typical 1.4-litre petrol car is 13 pence per mile, with higher rates for larger engines and lower rates for electric company cars at 9 pence per mile. These rates are updated quarterly by HMRC to reflect current fuel prices, with the next review anticipated in response to recent pump price movements. ### Using Mileage Allowances as a Tax Planning Tool For employees who frequently use their personal vehicle for business purposes, ensuring that employer mileage rates meet or exceed AMAP rates is important to avoid an unnecessary tax liability. Some employers pay below AMAP, and in these cases employees can claim the difference between what was paid and the AMAP rate as a deduction against their tax liability using form P87. For self-employed individuals, the HMRC fixed profit allocation system provides an alternative to claiming actual vehicle expenses. This system applies a fixed mileage rate to business journeys, simplifying record-keeping for sole traders and partners whose vehicle use is primarily for business purposes. ### Grey Fleet Considerations The term grey fleet refers to employees using their own personal vehicles for business journeys rather than a company-provided vehicle. While grey fleet arrangements avoid the BIK taxation that applies to company cars, they create obligations for both employers and employees to ensure proper insurance coverage, vehicle maintenance, and mileage record-keeping. ## Frequently Asked Questions **What mileage rate should my employer pay me?** Employers are not legally required to pay any specific mileage rate. However, paying the AMAP rate (45p/mile) means the payment is completely tax-free for the employee. Paying less allows the employee to claim the shortfall as a tax deduction. **Can I claim mileage for commuting to my regular place of work?** No. Commuting between your home and your regular place of work is not a business journey and cannot be claimed as business mileage. Only journeys that start or end at a location that is not your home or regular workplace qualify. **Do Advisory Fuel Rates apply if I drive an electric company car?** Yes. HMRC publishes reduced AFR rates for electric vehicles at 9 pence per mile. This reflects the lower fuel cost of charging compared to petrol or diesel consumption. **What records do I need to keep for mileage claims?** You should maintain a log of business journeys including date, starting location, destination, purpose of journey, and miles travelled. HMRC can require evidence of business mileage as part of any enquiry into mileage expense claims.

Disclaimer: CarTax.online provides general information for guidance purposes only. Tax rules and rates are subject to change. Always verify current rates with gov.uk or HMRC before making financial decisions. This guide was last reviewed in 2026.