Work out how much your employer can pay you tax-free for using your own vehicle for work, and the tax relief you can claim if they pay less. From the 2026/27 tax year the approved rate for cars and vans has risen from 45p to 55p a mile for the first 10,000 business miles. If you drive 12,000 business miles and your employer still pays 45p, the approved amount is £6,000 but you receive £5,400. You can claim Mileage Allowance Relief on the £600 gap, worth £120 to a basic rate taxpayer.
Mileage Allowance Calculator 2026/27
HMRC approved rates, Mileage Allowance Relief and taxable excess · Updated 13 October 2026
- HMRC approved amount
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- Paid by your employer
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- Mileage Allowance Relief (amount to claim)
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- Taxable excess
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- Excess subject to National Insurance
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- Tax-free passenger payments (up to)
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Rates for the 2026/27 tax year (6 April 2026 to 5 April 2027): cars and vans 55p a mile for the first 10,000 business miles and 25p after that; motorcycles 24p; bicycles 20p; passengers 5p.
HMRC approved mileage rates for 2026/27
| Vehicle | First 10,000 business miles | Each mile over 10,000 |
|---|---|---|
| Car or van | 55p (45p before 6 April 2026) | 25p |
| Motorcycle | 24p | 24p |
| Bicycle (including electrically assisted pedal bikes) | 20p | 20p |
| Passenger payment, per colleague carried | 5p | 5p |
The government announced the new 55p rate in May 2026 and backdated it to 6 April 2026, so it covers the whole tax year. It is the first rise for cars since 2011. HMRC applied the new rate from the start of the year while legislation catches up, and employers who paid 45p since April can top up the difference without tax or National Insurance. The same rates apply to the self-employed using simplified expenses. Other electric bikes use the motorcycle rate.
How the calculation works
- Approved amount = business miles × the rate for your vehicle. For a car, the first 10,000 miles are at 55p and the rest at 25p, and all your cars are counted together.
- If your employer pays less, the shortfall is your Mileage Allowance Relief (MAR). It is deducted from your taxable income, so the tax saved is MAR × your Income Tax rate.
- If your employer pays more, the excess over the approved amount is taxable pay, reported on a P11D.
- National Insurance uses its own limit: 55p for every business mile in a car or van, with no 25p step. Only the part above that is subject to Class 1 National Insurance.
Worked examples
| Situation | Approved | Paid | Result |
|---|---|---|---|
| Car, 12,000 miles, paid 45p, basic rate | £6,000 | £5,400 | MAR £600, relief £120 |
| Car, 8,000 miles, nothing paid, basic rate | £4,400 | £0 | MAR £4,400, relief £880 |
| Same, higher rate taxpayer | £4,400 | £0 | Relief £1,760 |
| Car, 12,000 miles, paid 60p | £6,000 | £7,200 | £1,200 taxable, NI on £600 |
| Car, 20,000 miles, paid 45p | £8,000 | £9,000 | £1,000 taxable, no NI |
| Motorcycle, 3,000 miles, nothing paid | £720 | £0 | Relief £144 |
| Bicycle, 1,000 miles, paid 10p, higher rate | £200 | £100 | Relief £40 |
What counts as business mileage
- Journeys you make for work in your own car, van, motorcycle or bicycle, such as visiting clients or travelling to a temporary workplace.
- Your normal commute between home and your permanent workplace does not count.
- The approved rate covers all the costs of owning and running the vehicle, so you cannot also claim fuel, electricity, vehicle tax, MOTs or repairs.
- Passenger payments of up to 5p a mile are tax-free when your employer pays them, but there is no relief if they pay less or nothing.
How to claim Mileage Allowance Relief
You can claim for the current tax year and the 4 previous tax years. If you do not file a Self Assessment return, use HMRC’s online service or the postal form; HMRC usually adjusts your tax code for the current year or sends a refund for earlier years. If you do file a return, you must claim on the return. HMRC asks for mileage logs showing the reason for each journey and the start and end postcodes. The relief cannot be more than the tax you paid in the year.
FAQs
Is the 2026/27 mileage rate 45p or 55p?
55p a mile for the first 10,000 business miles in a car or van, for all business journeys from 6 April 2026. 45p applied from 2011/12 to 2025/26. The 25p rate above 10,000 miles has not changed.
Does my employer have to pay 55p?
No. Employers do not have to pay the approved rate. If they pay less, you can claim tax relief on the difference, which is what this calculator works out.
Can I use these rates if I am self-employed?
Yes, if you use simplified expenses for a car, goods vehicle or motorcycle. You claim the flat rate per business mile instead of the actual running costs, and once you choose the flat rate for a vehicle you must keep using it for that vehicle.
Do I need to tell HMRC about payments at or below the approved rate?
No. Payments up to the approved amount are tax-free and your employer does not need to report them.
Related calculators
- UK Fuel Cost CalculatorWhat a journey costs in petrol or diesel
- Self-Employed Tax Calculator UKTax and Class 4 NI on your profit
- Car Tax Calculator UKVehicle Excise Duty for your car
Sources
- GOV.UK: Travel, mileage and fuel rates and allowances · rates from 2026 to 2027
- GOV.UK: Business travel mileage, rules for tax
- GOV.UK: Business travel mileage, rules for National Insurance · 55p for all miles
- GOV.UK: Passenger payments · 5p
- GOV.UK: Tax relief for vehicles you use for work · how to claim
- GOV.UK: Simplified expenses for vehicles
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- ATT: Increased HMRC approved mileage rates announced (21 May 2026) · backdating to 6 April 2026
Figures current as of 13 October 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
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