How to Make an HMRC Mileage Claim: Rates, Records, and PAYE Rules

To make an HMRC mileage claim, work out your total business miles for the tax year, multiply them by the approved mileage rate, subtract anything your employer already reimbursed, and claim tax relief on the shortfall. From 6 April 2026 the approved rate for cars and vans is 55p per mile for the first 10,000 business miles, then 25p per mile after that. PAYE employees claim through Form P87 (or Self Assessment if expenses top £2,500 for the year); self-employed workers claim through their Self Assessment return. The relief reduces your taxable income, so a basic-rate taxpayer recovers 20% of the shortfall and a higher-rate taxpayer 40%.

Approved Mileage Rates for 2026-27

HMRC’s approved rates are flat figures meant to cover fuel, insurance, servicing, and depreciation in one number. You do not need to keep individual fuel receipts or repair bills when using them.

The car and van rate is the same whether the vehicle is petrol, diesel, or electric. The 55p figure took effect on 6 April 2026, replacing the 45p rate that had been frozen since 2011.1GOV.UK. Expenses and Benefits: Business Travel Mileage for Employees’ Own Vehicles – Rules for Tax

If you carry a colleague on a business journey, you can claim an extra 5p per mile for each passenger, provided they are also travelling for work. Only the driver claims the passenger top-up.3GOV.UK. Employment Income Manual EIM31415 – Employees Using Own Cars or Vans for Work: Passenger Payments: Examples

Which Journeys Qualify

Only travel undertaken to carry out your work duties or to reach a temporary workplace qualifies. Your daily commute between home and your permanent workplace is not eligible, no matter the distance. HMRC treats regular commuting as a personal cost.4GOV.UK. Employment Income Manual EIM32055 – Travel Expenses: Ordinary Commuting

Journeys that do count include visits to clients, travel between different work sites during the day, and trips to a temporary workplace. A site is generally temporary if you attend it for a limited period or a specific task. If you keep going to the same site with no foreseeable end date, HMRC can reclassify it as your permanent workplace, and those journeys become ordinary commuting.

How to Calculate What You Can Claim

Multiply the first 10,000 business miles by 55p and any remaining miles by 25p. Add the two figures for your approved amount, then subtract whatever your employer has paid you for those miles. What’s left is the figure you claim tax relief on.

Say you drove 12,000 business miles in 2026-27 and your employer paid 20p per mile. The first 10,000 miles at 55p is £5,500. The next 2,000 miles at 25p is £500. Your approved total is £6,000. Your employer paid 12,000 × 20p, which is £2,400. The shortfall is £3,600. A basic-rate taxpayer gets back 20% of £3,600, so £720. A higher-rate taxpayer gets back 40%, so £1,440. The relief reduces your taxable income rather than refunding you pound-for-pound, which surprises some claimants.

Claiming as a PAYE Employee

If your total job expenses for the tax year are £2,500 or less, use Form P87. You can submit it online through the Government Gateway (which requires identity verification) or on paper.5GOV.UK. Claim Tax Relief for Your Job Expenses by Post Once HMRC processes the claim, it usually adjusts your tax code so you pay less going forward, or issues a refund for tax already overpaid. Processing typically takes several weeks.

Claims Over £2,500

If your total job expenses come to more than £2,500, you cannot use P87. You have to file a Self Assessment tax return, even if you are otherwise a straightforward PAYE employee, which means registering for Self Assessment if you haven’t already and filing by 31 January after the end of the tax year.5GOV.UK. Claim Tax Relief for Your Job Expenses by Post

Backdating Your Claim

You can claim for any of the previous four tax years. If you’ve been driving for work and never claimed, several years of relief may still be available. Each year uses the rates in force at the time, so miles driven before 6 April 2026 use the old 45p first-10,000 rate.

Claiming if You’re Self-Employed

Sole traders and partnerships report mileage through their Self Assessment return. Most use HMRC’s simplified expenses method, which applies the same flat rates to produce an allowable business expense.6GOV.UK. Simplified Expenses if You’re Self-Employed You enter total business miles into the relevant section of the return and the deduction reduces your taxable profit. Simplified expenses are open to sole traders and partnerships that don’t include a limited company as a partner. Limited companies cannot use the method.

The alternative is claiming actual vehicle costs: tracking every bill for fuel, servicing, insurance, and depreciation, and claiming the business-use proportion. You choose one method or the other when you first use a vehicle for business, and generally stick with it for as long as you use that vehicle. Flat rates suit most moderate-mileage drivers because the record-keeping is far lighter. High-mileage drivers with expensive running costs sometimes do better on actual costs.

When Your Employer Pays More or Less Than the Approved Rate

If your employer pays below the approved rate, you claim tax relief on the gap. This is called Mileage Allowance Relief. If your employer pays nothing, you claim on the full approved amount.

If your employer pays above the approved rate, the excess counts as earnings. Your employer must report it on form P11D and deduct income tax and National Insurance on the amount above the threshold.1GOV.UK. Expenses and Benefits: Business Travel Mileage for Employees’ Own Vehicles – Rules for Tax So if your employer pays 65p per mile against an approved rate of 55p, that extra 10p per mile is added to your taxable pay. A generous-sounding reimbursement rate shrinks once tax on the excess comes off.

Records HMRC Expects You to Keep

For every business journey, note the date, start and end points, the distance, and the work reason for the trip. A spreadsheet is fine; there is no required format. The important thing is logging trips as they happen rather than reconstructing months of travel from memory at year-end.

If HMRC checks the claim and finds inaccuracies, the consequences depend on why. A genuine mistake made with reasonable care may attract no penalty. Careless errors carry a penalty as a percentage of the extra tax owed, and deliberate inaccuracies carry higher penalties. Correcting an error before HMRC finds it reduces any penalty substantially. Inflating figures or dressing up commuting as business travel is the fastest way to turn a routine claim into an enquiry.

Situations Where the Rules Are Different

If your employer provides a company car, these approved mileage rates generally do not apply and different rules govern any reimbursement. The AMAP rates exist to compensate you for running a vehicle you pay for yourself.

Agency workers and those employed through umbrella companies face an added test. If someone at the end client has the right to supervise, direct, or control how you do your work, travel to that client’s site may count as ordinary commuting rather than business travel, even if the assignment is temporary. The right does not have to be exercised in practice for it to block the claim. Check your contract before assuming a client visit is claimable.

VAT-registered businesses can reclaim VAT on the fuel element of mileage driven in employee-owned vehicles, but not on the full AMAP rate. Only the fuel portion carries reclaimable VAT. To calculate it, use HMRC’s advisory fuel rates rather than the AMAP figure, then apply the VAT fraction. You need fuel receipts covering the value of the fuel portion to support the claim. This applies to employees on your payroll, not to contractors or freelancers.