Business Mileage Records and 55p Rate: 2026/27 Guide

For every business journey, record the date, destination, business purpose, start and end locations, vehicle, business miles and amount reimbursed or claimed. Good mileage records support bookkeeping, payroll, VAT and tax-relief calculations.

From 6 April 2026, HMRC’s approved rate for employees using their own cars or vans increased to 55p per business mile for the first 10,000 miles. The rate above 10,000 miles remains 25p.

Approved mileage rates for 2026/27

The 55p car and van rate applies from 6 April 2026; the previous first-10,000-mile rate was 45p. Do not apply the new rate to earlier journeys.

What counts as a business journey?

A qualifying journey is made in the performance of employment duties or to a temporary workplace. Ordinary commuting between home and a permanent workplace is private travel and should not be included.

Examples can include:

• visiting a customer or supplier;
• travelling between business locations;
• attending a temporary site, course or meeting; and
• collecting goods for the business.

A journey does not become business travel merely because the employee works during it, carries equipment or receives a call.

Information to record

A robust mileage log contains:

• driver’s name;
• date of travel;
• starting point and destination;
• business reason and customer or project;
• business miles;
• vehicle type and registration where useful;
• passengers carried for business;
• rate applied and amount;
• approval by the employer; and
• links to related receipts or appointments.

Record journeys contemporaneously. A year-end estimate based only on calendar entries is weaker evidence.

Employee mileage reimbursement

Mileage Allowance Payments are amounts paid to employees for using their own vehicle on business journeys. The employer calculates the approved amount by multiplying business miles by the statutory rate.

If payments exceed the approved amount, the excess is taxable and must be handled through payroll or reporting as HMRC requires. If the employer pays less, the employee may claim Mileage Allowance Relief on the shortfall.

2026/27 example

An employee drives 12,000 qualifying miles in their own car during 2026/27:

• 10,000 miles × 55p = £5,500;
• 2,000 miles × 25p = £500;
• approved amount = £6,000.

If the employer pays £4,800, the employee may be able to claim tax relief on the £1,200 shortfall. Relief is based on the shortfall, not a £1,200 cash refund.

Do miles reset for each vehicle?

No. HMRC states that it does not matter if the employee uses more than one vehicle; their car and van business mileage is considered together for the 10,000-mile threshold.

Passenger payments

An employer can make an additional approved passenger payment for carrying colleagues on the same business journey where the conditions are met. Record each passenger’s name and the shared business purpose.

Self-employed mileage

Sole traders and eligible partnerships may use HMRC’s simplified mileage expenses instead of calculating actual vehicle running costs, subject to the relevant conditions. Once simplified expenses are used for a vehicle, switching methods can be restricted while that vehicle remains in the business.

Companies cannot use the self-employed simplified-expenses regime for a company-owned vehicle. A director using their own car can be reimbursed under the employee mileage rules.

VAT on mileage payments

A VAT-registered employer may be able to reclaim the VAT fuel element of a qualifying employee mileage payment, but not VAT on the full mileage allowance. The claim is limited using HMRC advisory fuel rates and requires a valid VAT fuel receipt covering the relevant fuel purchase.

Electric-vehicle and company-car journeys have specific advisory rates. Check the rate in force on the travel date.

Company cars

Where the business provides the vehicle, approved mileage allowance rates do not apply in the same way. HMRC’s advisory fuel or electricity rates can be relevant when reimbursing business fuel or requiring repayment for private fuel.

Bookkeeping entries

Record the approved business mileage as a travel expense and the amount due to the employee or director as a liability until paid. Keep mileage claims with payroll or expense records.

Separate:

• employee-owned vehicle mileage;
• company-car fuel reimbursements;
• parking and tolls;
• train, taxi and accommodation costs; and
• private travel or fines, which have different treatment.

Controls for mileage claims

• Use a standard claim form or controlled app.
• Require business purposes, not labels such as “meeting”.
• Check routes and unusual distances.
• Prevent duplicate claims for fuel and mileage.
• Apply the correct rate for the journey date.
• Monitor the cumulative 10,000-mile threshold.
• Reconcile approved claims to payroll and bank payments.
• Retain VAT receipts where a fuel-element claim is made.

Frequently asked questions

Is the first 10,000-mile rate still 45p?

No for journeys from 6 April 2026. HMRC’s 2026/27 approved amount is 55p for the first 10,000 car or van business miles.

Can home-to-office mileage be claimed?

Ordinary commuting to a permanent workplace is normally private. Temporary-workplace rules require a fact-specific review.

Does the employee need fuel receipts?

Not to establish the mileage allowance itself, but the employer needs appropriate VAT fuel receipts to support any VAT claim on the fuel element.

Official source

See HMRC’s business mileage rules, which confirm the 55p rate from 6 April 2026.