Expenses stores vehicle tax and fuel rates so that mileage claims are calculated correctly.
Approved mileage rates
HMRC allows you to pay employees a tax-free amount for using their own vehicle for business travel. These are called Mileage Allowance Payments (MAPs). Payments up to the approved amount do not need to be reported to HMRC.
The approved amount is calculated by multiplying the employee's business miles for the year by the rate per mile for their vehicle type.
Vehicle type | Up to 10,000 miles | Over 10,000 miles |
|---|---|---|
Cars and vans | 55p | 25p |
Motorcycles | 24p | 24p |
Bikes | 20p | 20p |
Note: The rate for cars and vans increased from 45p to 55p per mile (for the first 10,000 business miles) from 6 April 2026 - the first change since 2011. Rates for motorcycles and bikes are unchanged. Always verify against current HMRC guidance.
Example: An employee travels 12,000 business miles in their car. The approved amount is £6,000 (10,000 x 55p + 2,000 x 25p).
If payments exceed the approved amount, the excess must be reported to HMRC using form P11D. If payments are below the approved amount, the employee may claim tax relief on the unused balance under the Mileage Allowance Relief (MAR) scheme. Employers can optionally report unused balances to HMRC under the Mileage Allowance Relief Optional Reporting Scheme (MARORS).
Advisory fuel rates
Advisory fuel rates are HMRC's recommended amounts for reimbursing the fuel element of business mileage. They apply to:
VAT reclaimed on business mileage in a personal vehicle
Reimbursement for business travel in a company car
The rates are inclusive of VAT and are reviewed quarterly by HMRC (in March, June, September, and December). For the current rates, see the HMRC website.
Electric vehicles: HMRC publishes separate Advisory Electric Rates (AERs) for fully electric company cars, split by charging method. As of the June 2026 quarterly review these are 7p per mile for home charging and 15p per mile for public charging. Hybrid vehicles are treated as petrol or diesel for advisory fuel rate purposes.
VAT calculation on mileage
To calculate the VAT element of a mileage claim, divide the gross fuel cost by 6 (assuming a 20% VAT rate).
Example using a 21p advisory fuel rate over 100 miles:
Personal car | Company car | |
|---|---|---|
Mileage rate | 55p x 100 = £55.00 | 21p x 100 = £21.00 |
VAT element | (21p x 100) / 6 = £3.50 | (21p x 100) / 6 = £3.50 |
Net | £51.50 | £17.50 |
VAT | £3.50 | £3.50 |
Gross | £55.00 | £21.00 |