Understanding HMRC-Approved Tax-Free Mileage Rates: A Potential Lifesaver for UK Drivers

For many UK workers, driving their own vehicles for business purposes can be a costly endeavour. Fortunately, there is a tax-free benefit available that can provide significant financial relief: the HMRC-approved tax-free mileage rates. These rates allow employees to claim tax-free reimbursement for using their own vehicles for business travel. However, with the rising cost of motoring, there’s growing pressure to increase these rates to reflect the actual expenses workers incur.

This article dives into the current rates, the proposed changes, and what it means for both employees and the self-employed.

What Are HMRC-Approved Tax-Free Mileage Rates?

The HMRC-approved tax-free mileage rates are the maximum amounts that can be reimbursed by an employer without the employee being taxed on the reimbursement. These rates are designed to cover all aspects of motoring costs, including fuel, vehicle wear and tear, insurance, and other associated costs of using a personal vehicle for business purposes.

Currently, the rates are:

Vehicle Type	First 10,000 Business Miles	Above 10,000 Miles
Cars & Vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

Employees can also claim an extra 5p per mile per passenger carried on a business trip. 

These rates have remained unchanged since 2011, and there are growing calls to increase them due to rising motoring costs.

What Are Mileage Allowance Payments (MAPs)?

Mileage Allowance Payments (MAPs) are amounts paid by an employer to an employee for using their own vehicle for business travel. These payments are intended to cover travel costs such as fuel, vehicle wear and tear, insurance and other running costs. MAPs are defined in HMRC’s tax rules for business travel reimbursements.

Under HMRC rules, employers are permitted to pay employees a set amount for business mileage without reporting it to HMRC — as long as the total does not exceed the approved amount defined by HMRC.

MAPs can be paid:

• Per mile based on distance driven
• As a lump sum that covers business use of a vehicle
• Or as a reimbursement that reflects actual business mileage costs

These payments can apply whether the vehicle used is a car, van, motorcycle or bicycle. 

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What Is Mileage Allowance Relief (MAR)?

Mileage Allowance Relief (MAR) is the tax relief you can claim if:

• You are paid less than the HMRC‑approved tax‑free mileage rates, or
• You are not paid any mileage allowance by your employer for business travel.

MAR lets you claim tax relief on the difference between what you were paid and the HMRC‑approved rate. In other words, it protects employees who aren’t fully reimbursed for their work‑related mileage.

To be eligible:

• You must have used your own vehicle (car, van, motorcycle, or cycle) for business travel.
• You must have received less than the HMRC AMAP rate for that mileage.

How MAR works: If your employer only pays 30p per mile but the approved amount is 45p per mile, you may claim relief on the difference (15p per mile) through your tax return or other claim method. 

Also Read:

April 2026 Car Tax Changes: What UK Drivers Need to Know About UK Vehicle Excise Duty

How Much Tax‑Free Mileage Can You Claim?

The simple answer:

• You can claim up to 45p per mile tax‑free for the first 10,000 business miles in a year.
• If you go above 10,000 business miles, you can claim 25p per mile tax‑free for additional miles.

This means if you drive 8,000 business miles in a tax year and are fully reimbursed at 45p, you could receive £3,600 tax‑free.

However, if your employer pays a lower rate, you may be able to claim tax relief on the difference between what you’re paid and the HMRC rate. 

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How Many Kilometres Can You Claim Tax‑Free?

UK mileage rules use miles, but to translate to kilometres:

• 45p per mile ≈ 28p per kilometre
• 25p per mile ≈ 16p per kilometre

These aren’t official HMRC figures but a simple conversion for context.

What Is the 45p Mileage Allowance?

The 45p mileage allowance applies to the first 10,000 business miles you drive in a tax year using your own car or van.

This rate was last updated back in 2011 — meaning it hasn’t changed in well over a decade despite significant rises in motoring costs.

Many workers, particularly those who drive long distances for work (e.g., social workers, field engineers), argue this rate is no longer sufficient to cover real running costs.

The 45p Mileage Allowance Update: Why It Has Become a Point of Controversy

The 45p-per-mile rate, while once adequate, has been widely viewed as outdated. The real cost of running a car is now significantly higher, with figures suggesting it costs around 67p per mile to own and operate a car. When considering the overall increase in fuel prices, insurance, and maintenance costs over the past decade, the 45p rate no longer adequately reflects the true costs faced by drivers.

Is Mileage Exempt from Tax?

Yes, but only if the reimbursement stays within the HMRC‑approved amount.

• Payments up to the approved AMAP rates are exempt from tax and National Insurance.
• Anything above this must be reported and will be taxed as employment income.

Crucially, if you receive less than the HMRC rate, you can usually apply to HMRC for Mileage Allowance Relief — a tax refund on the amount you weren’t reimbursed. 

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What Would an AMAP Rate Increase Mean for Drivers?

An increase in the Approved Mileage Allowance Payment (AMAP) rate would allow employees to claim higher amounts for using their own vehicles for work without triggering tax liabilities. Currently, if an employee is reimbursed at a rate above the HMRC-approved amount, the excess is considered taxable income. On the other hand, if the rate is below the approved amount, employees can claim Mileage Allowance Relief on the shortfall.

For instance, if an employer reimburses a worker at 30p per mile instead of 45p, the difference (15p per mile) can be claimed as tax relief. However, if the reimbursement rate is increased to reflect actual motoring costs—say, to 67p per mile—employees could significantly benefit from higher tax-free reimbursements.

Is a Change to the Mileage Rates Coming?

Recent comments by Chancellor Rachel Reeves indicate the government is reviewing the mileage allowance, acknowledging that costs have risen and the current rate hasn’t been updated in years.

According to reporting from last week, Reeves said the government is “looking at the issue” and will consider changes as part of a future fiscal update.

An increase to align AMAPs more closely with actual motoring costs — which some estimates put nearer to 60p+ per mile — could significantly benefit those who drive frequently for work. While no official new rate has been announced yet, pressure is rising for a formal AMAP rate increase.

Who Benefits Most from Higher Mileage Rates?

Increased HMRC mileage rates would help:

• Field‑based employees (sales reps, engineers, consultants)
• Healthcare and social care workers with long travel distances
• Self‑employed drivers, including tradespeople who use a personal vehicle for work
• Those whose employers reimburse less than the HMRC‑approved amounts

For example, healthcare workers like social workers and NHS staff, who drive long distances to visit patients, would benefit greatly from a higher AMAP rate. If the rate were increased to 67p per mile, an employee driving 200 miles a week for work could potentially claim an additional £44 per week tax-free—a significant relief considering the rising costs of fuel and car maintenance.

For the self‑employed, using the tax‑free mileage rates can reduce taxable profits when they choose to use this instead of actual vehicle costs in their accounts. 

You might also want to read about VAT regulations for car rentals:

VAT on Car Hire in the UK – What Businesses Need to Know

Self-Employed Drivers Tax-Free Mileage

The self-employed also stand to benefit from a rise in the HMRC-approved tax-free mileage rates. Many self-employed individuals, such as tradespeople, are entitled to claim mileage as an allowable expense when filing their taxes. However, this can only be claimed if they have not already deducted actual running costs or capital allowances for their vehicles.

The increase in the mileage rate could help self-employed individuals reduce their tax bills more effectively, as they would be able to claim a higher tax-free reimbursement for the business miles they drive.

How Apex Accountants & Tax Advisors Can Help

At Apex Accountants, we offer expert advice and support for both employees and self-employed individuals looking to maximise their mileage claims. Our services include:

• Mileage policy and payroll treatment reviews
• Calculations for Mileage Allowance Relief (including back-claims for up to 4 prior tax years)
• Sole trader advice on simplified expenses versus actual vehicle running costs

If the AMAP rate increase goes ahead, now is the perfect time to ensure that your mileage claims are compliant and optimised for maximum savings.

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Conclusion

The HMRC-approved tax-free mileage rates are an essential tool for employees and self-employed individuals alike, providing a tax-free way to reimburse driving costs for business travel. However, the current rates, which have remained unchanged for over a decade, are no longer sufficient to cover the increasing costs of motoring. An increase in these rates, as discussed by Chancellor Rachel Reeves, could provide much-needed financial relief to millions of workers across the UK.

With the government considering changes to these rates, it’s crucial to stay informed about the latest developments and ensure that you are claiming the full benefits available to you. At Apex Accountants, we’re here to help you navigate these changes and ensure that your claims are accurate, compliant, and maximised to reduce your tax liabilities.