How much can I claim per mile? 2026/27 UK Mileage Allowance Guide

Whether you travel for business as an employee or run your own sole trader enterprise, deducting the costs of your journeys remains a crucial way to reduce your tax bill. When clients ask, “how much can I claim per mile?”, the answer depends heavily on your employment status, the type of vehicle you drive, and whether your employer already reimburses a portion of your costs.

For the 2026/27 tax year, HMRC strictly governs these tax-free amounts through statutory legislation. This guide breaks down exactly what you can claim, separating the rules for PAYE employees and self-employed individuals.

Employees: Approved Mileage Allowance Payments (AMAP)

If you use your own personal vehicle for qualifying business travel, your employer can pay you a tax-free amount known as an Approved Mileage Allowance Payment (AMAP). Section 230 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) sets these statutory maximums.

For the 2026/27 tax year, the approved AMAP rates are:

• Cars and vans: 45p per mile for the first 10,000 business miles in the tax year, and 25p per mile for every mile thereafter.
• Motorcycles: 24p per mile, irrespective of the total distance.
• Bicycles: 20p per mile, irrespective of the total distance.

The 10,000-mile threshold applies to the total number of business miles you travel across all associated employments in the tax year, preventing individuals from resetting the 45p rate by switching between connected companies.

Passenger Payments

If you carry fellow employees in your car or van on a business journey, section 234 of ITEPA 2003 allows your employer to pay you an additional tax-free passenger payment.  You can claim an extra 5p per mile for each passenger, provided the travel is also qualifying business travel for them.

What if my employer pays less? (Mileage Allowance Relief)

Many employers do not pay the full 45p per mile statutory rate. If your employer reimburses you at a lower rate (for example, 20p per mile), you do not lose out on the tax benefit.

Under section 231 of ITEPA 2003, you are entitled to Mileage Allowance Relief (MAR) for the shortfall.  MAR allows you to deduct the difference between the approved AMAP amount and the amount your employer actually paid you directly from your taxable earnings.  As confirmed by the Upper Tribunal in Laing O’Rourke Services Limited v HMRC, this relief is available against your general earnings regardless of whether the employer has made any mileage allowance payment at all.

Example Calculation: If you drive 5,000 business miles in a car during the 2026/27 tax year:

1. Statutory Approved Amount: 5,000 miles × 45p = £2,250.
2. Employer Reimbursement: Your employer pays you 20p per mile (5,000 × 20p = £1,000).
3. MAR Claim: You can claim the £1,250 difference (£2,250 – £1,000) as an expense against your employment income. If you are a basic rate (20%) taxpayer, this reduces your final tax bill by £250.

Sole Traders: Simplified Expenses

If you are a self-employed sole trader or a partner in an unincorporated partnership, you do not use the AMAP rules. Instead, section 94F of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) allows you to use an optional “simplified expenses” flat rate.

The simplified rates mirror the employee rates:

• Cars and goods vehicles: 45p for the first 10,000 business miles, and 25p after that.
• Motorcycles: 24p per mile.

Using this fixed rate covers all vehicle running costs, including fuel, insurance, servicing, and depreciation.  You cannot claim any actual motor expenses or capital allowances in addition to this rate.  Crucially, if you have ever claimed capital allowances on the vehicle in the past, HMRC’s Business Income Manual confirms you are legally barred from switching to the mileage rate for that specific vehicle, as the rate already contains a depreciation element.

(Note: Bicycles are not explicitly covered by the section 94F simplified flat rate for sole traders; you must instead claim the actual apportioned costs of using the bicycle for business).

2026/27 Context: Fuel Duty Changes

When deciding whether to use flat mileage rates or calculate your actual costs, you must consider the underlying cost of fuel. The UK government has extended the temporary 5 pence per litre (ppl) cut in fuel duty until the end of August 2026.  However, duty will gradually increase by 1ppl in September 2026, 2ppl in December 2026, and 2ppl in March 2027.

While these changes will make running your vehicle more expensive towards the end of the tax year, they do not alter the statutory 45p/25p rates. If your actual running costs spike significantly due to these duty hikes, sole traders may find claiming actual apportioned costs more tax-efficient than relying on the simplified mileage rate.

Company Cars

If your employer provides you with a company car, the rules completely change. You cannot claim the 45p per mile AMAP rate. Instead, you must use HMRC’s Advisory Fuel Rates (AFR) or Advisory Electricity Rates (AER) for fully electric vehicles. HMRC updates these rates quarterly based on current fuel prices, and they exist purely to reimburse the actual cost of fuel used for business trips without triggering a taxable fuel benefit.

Summary of 2026/27 Mileage Claims

For completeness, if you are an employee seeking to claim Mileage Allowance Relief (MAR) for a shortfall, you must submit a form P87 to HMRC if your claim is under £2,500, or include it on your Self Assessment tax return if the claim exceeds £2,500 or you already meet the criteria for Self Assessment.

Next steps: Review your mileage logs to ensure they strictly capture journeys made wholly and exclusively for business purposes (excluding ordinary commuting), and check if you need to submit a P87 claim for any employer reimbursement shortfalls before the tax year ends.