Approved Mileage Rates

Employers can pay up to the approved amount without reporting it

When you use your own vehicle for business journeys and your employer pays you for it, that payment is a mileage allowance payment. There is an approved amount for these payments, based on your business miles and the type of vehicle, and an employer can pay up to it without reporting the payments to HM Revenue and Customs (HMRC).

For cars, the rate can differ between tax and National Insurance

For tax, the first 10,000 business miles in a tax year are covered at 55 p a mile, and each mile after that at 25 p a mile.

National Insurance works differently. The higher rate of 55 p a mile applies to all business miles for National Insurance purposes, with no drop after 10,000 miles. The two calculations can therefore give different figures for the same mileage.

If your employer pays less, you can claim the difference

If your employer pays you less than the approved amount for your business miles, you can claim tax relief on the difference from HMRC through Mileage Allowance Relief. Only business miles count, so ordinary commuting to your usual place of work is not included.

Company car fuel rates are a separate set of figures

Advisory fuel rates apply when an employer provides the company car, not when you use your own vehicle. They vary with engine size and fuel type, and electric cars have their own rates.