UK Mileage Reimbursement

HMRC refers to His Majesty’s Revenue and Customs, the official authority that dictates rules for tax, payments, and customs. It is responsible for collecting taxes and disbursing certain government benefits to the state. It is also responsible for funding public services and enforcing tax and customs laws across the UK.

HMRC is also tasked at setting the car mileage allowance that businesses can pay to their employees for using their vehicles for business purposes.

What is car mileage allowance?

A car mileage allowance is the payment or reimbursement given to employees (or those using their own vehicle) for business travel using their private car, van, motorcycle, or bicycle. It’s designed to cover the running costs of that vehicle, including fuel, maintenance, insurance, depreciation, wear and tear, and similar factors. These allowances are governed by HMRC rules so they can be non-taxable up to certain approved limits.

What are mileage allowance payments (MAPs) and mileage allowance relief (MAR)?

Mileage allowance payments (MAPs):

This refers to what employers pay their employees for business journeys in their own vehicle. MAPs can be paid per mile, as lump sums, or by reimbursement of actual costs.

Approved mileage allowance payments (AMAPs):

This is the maximum amount that HMRC recognises as non-taxable when reimbursing business miles under MAPs. If MAPs stay at or below AMAPs, employees pay no tax or NI (National Insurance) on them. If payments exceed AMAPs, the excess is taxable.

Mileage allowance relief (MAR):

If an employer pays less than the approved amount (AMAP), or nothing, employees can claim relief for the shortfall. In other words, MAR is a tax relief that covers the gap between what the employer pays under MAPs and the HMRC-approved rates.

What is HMRC’s definition of a business mile?

A “business mile” (or business journey) means travel that is wholly, exclusively, and necessarily for business. Travel from home to a permanent workplace is not a business journey (that’s ordinary commuting), so those miles don’t count. Journeys to meet clients, travel between workplaces, temporary workplace travel, and similar trips do count.

If you use more than one vehicle in the same year, all business miles are aggregated when calculating whether you cross thresholds (for example, the first 10,000 miles/above that) for cars and vans.

2025 mileage rates in the UK (AMAP/HMRC rates)

Here are the current HMRC rates for business travel in the 2025–26 tax year under AMAPs:

What does mileage allowance cover?

The approved mileage rates are intended to cover the “running costs” of the vehicle, which include:

• Fuel/electricity (if using electric vehicle in “own vehicle” scenario)
• Maintenance, servicing, tyres, etc.
• Insurance, vehicle excise duty (road tax), depreciation or loss of value over time

They don’t automatically cover all travel/transport costs. For example:

• Parking tickets, speeding fines, and similar violations are not included. Employers or employees might separately reimburse parking, tolls, congestion charges, and the like, but only if they are business-related and properly documented.
• Costs of commuting (home ↔ permanent workplace) are excluded.