Mileage Allowance Relief Calculator UK 2026
Calculate your mileage allowance relief and tax refund for business travel using official HMRC rates for 2026/27. Our calculator handles cars, motorcycles, and bicycles, comparing HMRC-approved rates against employer reimbursement to show exactly how much tax relief you can claim. Works for employees who use their personal vehicle for business journeys and receive no payment or partial reimbursement from their employer.
Mileage Allowance Rates 2026/27
Cars & Vans
45p per mile for first 10,000 business miles, then 25p per mile thereafter. Rate covers fuel, insurance, servicing, road tax, depreciation, and all running costs.
Motorcycles
24p per mile for all business miles with no threshold. Flat rate applies regardless of annual mileage. Covers all motorcycle running costs including fuel, insurance, and maintenance.
Bicycles
20p per mile for all business miles with no threshold. HMRC's most tax-efficient vehicle option. Combines with Cycle to Work Scheme for maximum savings.
Backdating Claims
Claim relief for current year plus 4 previous years (5 years total). Claims in 2026 can backdate to 2022/23. Must have accurate mileage records and not previously claimed relief.
Who Can Use This Calculator?
Employed Workers
Employees who drive their personal vehicle for business purposes. Sales reps, consultants, healthcare workers, and anyone making business journeys beyond normal commuting. Check your take-home pay after relief.
High Mileage Drivers
Regular business travellers covering 5,000+ miles annually. Community nurses, field engineers, mobile technicians, and territory managers. Higher mileage means larger tax refunds - sometimes £500+ per year.
Partially Reimbursed
Workers whose employers pay mileage but below HMRC rates. If your employer pays 20p per mile but HMRC allows 45p, you can claim relief on the 25p difference. Compare with commute costs for full picture.
Unclaimed Relief
Employees who've never claimed mileage relief despite business travel. You can backdate claims for up to 5 years (current year plus 4 previous). One claim could recover £1,000+ in unclaimed tax relief.
🚗 Calculate Your Mileage Allowance Relief
Enter your business mileage details to calculate your tax relief. All calculations use official HMRC rates for 2026/27.
How Mileage Allowance Relief Works
Calculate Allowance
HMRC approves fixed rates per mile: 45p for first 10,000 car miles (then 25p), 24p for motorcycles, 20p for bicycles. Multiply your business miles by these rates to get total approved allowance.
Subtract Reimbursement
If your employer paid you for mileage, subtract that amount from HMRC's approved allowance. The difference is your unreimbursed shortfall - the amount you paid from your own pocket.
Apply Tax Rate
Multiply the shortfall by your income tax rate (20%, 40%, or 45%). This is your tax relief - the amount HMRC refunds. Higher rate taxpayers get more relief per mile driven.
Claim with HMRC
Submit form P87 online at gov.uk or by post. HMRC processes claims in 8-12 weeks. Keep mileage logs for 6 years. You can backdate claims for up to 4 previous tax years.
Understanding Mileage Allowance Relief
Mileage allowance relief (MAR) lets UK employees claim tax relief on business travel costs when using their personal vehicle for work. HMRC sets approved mileage allowance payments (AMAPs) covering all running costs - fuel, insurance, servicing, depreciation, road tax. If your employer pays nothing or less than these rates, you can claim tax relief on the difference.
The relief works by reducing your taxable income. For example, if you drove 10,000 business miles in your car, HMRC allows £4,500 (10,000 × 45p). If your employer paid £2,000, you have a £2,500 shortfall. At 20% tax rate, you'd receive £500 relief (£2,500 × 20%). Higher rate taxpayers at 40% would receive £1,000 for the same mileage.
HMRC Approved Mileage Rates 2026/27
Cars and vans use a two-tier structure: 45p per mile for the first 10,000 business miles, dropping to 25p per mile thereafter. This reflects that some costs (insurance, road tax, depreciation) remain fixed regardless of mileage, while variable costs (fuel, maintenance) continue scaling. A driver covering 15,000 miles receives £4,500 for the first 10,000 miles plus £1,250 for the remaining 5,000 miles, totalling £5,750.
Motorcycles receive 24p per mile with no threshold - a flat rate for all business miles. Bicycles receive 20p per mile, also flat rate. These simpler structures reflect lower running costs and no threshold drop-off. Motorcycles and bicycles offer excellent tax efficiency for short-distance business travel, especially when combined with schemes like the Cycle to Work Scheme.
💡 What Counts as Business Mileage?
Business mileage includes travel from your workplace to client sites, between multiple work locations, to temporary workplaces, training courses, and business meetings. It does NOT include commuting between home and your permanent workplace - that's personal travel. If you work from home, travel to your employer's office is usually commuting unless your home is your primary workplace for tax purposes. Check remote work savings to see if home working reduces costs.
Employer Reimbursement Scenarios
Three common scenarios exist: (1) No payment - employer reimburses nothing, you claim relief on full HMRC allowance. (2) Partial payment below HMRC rates - employer pays 20p per mile, you claim relief on 25p shortfall. (3) Full payment at HMRC rates - employer pays 45p/25p, no relief claimable as you're fully reimbursed. Some employers pay above HMRC rates - the excess becomes taxable income added to your salary.
If your employer pays inconsistently (sometimes full rate, sometimes nothing), calculate the annual shortfall. Total what HMRC allows for all your business miles, subtract what employer actually paid across the year, and claim relief on the difference. Many employers use payroll systems that automatically track and report mileage payments.
Backdating Claims
You can claim for the current tax year plus the previous four years - five years total. Claims submitted in 2026 can backdate to 2022/23. You must have accurate mileage records for all claimed years and cannot have previously claimed relief for those periods. A driver consistently covering 10,000 miles annually with no employer reimbursement could recover £4,500 in relief backdated over five years at 20% tax rate.
HMRC requires evidence: mileage logs showing date, destination, purpose, and miles for each journey. Digital tracking apps, employer timesheets, or handwritten logbooks all work. Without records, HMRC may reject claims. Even if you lack perfect records, partial claims with available evidence may succeed. Consider using tax calculators to understand overall tax position when claiming relief.
Real Mileage Allowance Relief Examples
Example 1: Sales Representative
Person: Sarah, regional sales manager
Situation: Drives 18,000 business miles annually in personal car. Employer pays 25p per mile.
HMRC Allowance: £6,500 (10,000 @ 45p + 8,000 @ 25p)
Employer Paid: £4,500 (18,000 @ 25p)
Shortfall: £2,000
Tax Rate: 40% (higher rate)
Annual Tax Relief: £800
Sarah's employer pays below HMRC rates, leaving a £2,000 shortfall. At 40% tax, she receives £800 annual relief. Over 4 backdated years, that's £3,200 total. Compare this with her overall tax position to see the benefit.
Example 2: Community Nurse
Person: James, NHS community nurse
Situation: Drives 8,000 business miles annually. Employer reimburses nothing.
HMRC Allowance: £3,600 (8,000 @ 45p)
Employer Paid: £0
Shortfall: £3,600
Tax Rate: 20% (basic rate)
Annual Tax Relief: £720
James receives no mileage payment, so claims relief on full £3,600 HMRC allowance. At 20% tax, he gets £720 back annually. If he's never claimed before, backdating 4 years recovers £2,880 total. This significantly improves his net income.
Example 3: Delivery Cyclist
Person: Emma, employed courier
Situation: Cycles 3,000 business miles annually. Employer pays 10p per mile.
HMRC Allowance: £600 (3,000 @ 20p)
Employer Paid: £300 (3,000 @ 10p)
Shortfall: £300
Tax Rate: 20% (basic rate)
Annual Tax Relief: £60
Emma's employer pays half HMRC's bicycle rate, creating £300 shortfall. At 20% tax, relief is £60 annually. While modest, combining with Cycle to Work Scheme and backdating 4 years adds up to meaningful savings.
Example 4: Motorcycle Courier
Person: David, pharmaceutical courier
Situation: Rides 12,000 business miles annually on personal motorcycle. Employer pays full 24p rate.
HMRC Allowance: £2,880 (12,000 @ 24p)
Employer Paid: £2,880 (12,000 @ 24p)
Shortfall: £0
Tax Rate: 40% (higher rate)
Annual Tax Relief: £0
David's employer fully reimburses at HMRC rates, leaving no shortfall. He cannot claim additional relief. However, the £2,880 payment is tax-free, saving him £1,152 annually in tax compared to if it were taxable salary. Check how this affects contractor vs employed comparisons.
Mileage Allowance Relief Questions
What is the HMRC mileage allowance rate for 2026?
For 2026/27, HMRC approved mileage allowance rates are: Cars and vans - 45p per mile for the first 10,000 miles, then 25p per mile. Motorcycles - 24p per mile (all miles). Bicycles - 20p per mile (all miles). These rates cover all vehicle running costs including fuel, insurance, road tax, servicing, repairs, MOT, depreciation, and capital costs.
The two-tier car rate reflects that some costs are fixed (insurance, road tax) while others scale with mileage (fuel, maintenance). Employers can pay up to these rates tax-free. If they pay less or nothing, employees can claim tax relief on the difference through form P87.
How do I claim mileage allowance relief?
Claim mileage allowance relief by completing HMRC form P87 online at gov.uk/tax-relief-for-employees/vehicles-you-use-for-work or by post. You'll need your total business miles for the tax year, employer reimbursement amount (if any), National Insurance number, and employer details. HMRC calculates the relief automatically based on approved rates.
Online claims process within 8-12 weeks. Postal claims take longer. Keep detailed mileage logs for 6 years as evidence: date, start/end location, purpose, and miles for each journey. HMRC may request these records to verify your claim. You can claim for the current year plus the previous 4 years.
Can I claim mileage if my employer already pays me?
Yes, if your employer pays less than the HMRC approved rate. You can claim tax relief on the difference between what HMRC allows and what your employer paid. For example, if HMRC allows £4,500 for 10,000 car miles but your employer paid £2,000, you can claim relief on the £2,500 shortfall. At 20% tax rate, that's £500 relief.
If your employer pays at or above HMRC rates, no additional relief is available - you're already fully reimbursed tax-free. If they pay above HMRC rates, the excess becomes taxable income. Calculate your specific situation with our PAYE breakdown calculator.
How far back can I claim mileage allowance relief?
You can claim mileage allowance relief for the current tax year plus the previous 4 years - that's 5 years total. For claims made in 2026, you can backdate to 2022/23 tax year. You must have accurate mileage records for all years claimed and cannot have previously received this relief for those periods.
For example, if you drove 10,000 business miles annually with no employer reimbursement, that's £4,500 HMRC allowance per year. At 20% tax rate, that's £900 annual relief × 5 years = £4,500 total potential recovery. Use our calculator's multi-year projection to estimate your backdating potential.
What counts as business mileage?
Business mileage includes travel from your workplace to client sites, between multiple work locations, to temporary work sites (under 24 months), training courses, business meetings, and site visits. You must travel in the performance of your duties - the journey itself must be part of your work.
Business mileage does NOT include commuting between home and your permanent workplace - this is personal travel regardless of distance. If you work from home and it's your main workplace for tax purposes, trips to your employer's office may qualify. Multi-site workers travelling between locations can often claim. Check your employment contract and discuss with your employer or HMRC if unsure.
Do I pay tax on mileage payments from my employer?
No tax is due if your employer pays up to the HMRC approved rates (45p/25p for cars, 24p for motorcycles, 20p for bicycles). These payments are specifically exempt from income tax and National Insurance. They don't appear on your P60 or increase your taxable income.
If your employer pays above HMRC rates, the excess is taxable income. For example, if they pay 50p per mile for car travel, 5p per mile is taxable on the first 10,000 miles. If they pay below HMRC rates, the shortfall qualifies for tax relief. Use our take-home calculator to see how mileage affects your net pay.
Can self-employed people claim mileage allowance relief?
Self-employed individuals claim business mileage differently through their Self Assessment tax return as a business expense. They use the same HMRC approved rates but claim via simplified expenses on their tax return, not through P87 mileage allowance relief which is exclusively for employees (PAYE workers).
Self-employed workers deduct mileage costs from business profits, reducing both income tax and Class 4 National Insurance. They can choose between simplified expenses (using HMRC's flat rates) or actual costs (claiming real vehicle expenses with receipts). Check our self-employed tax calculator to compare options.
What records do I need to keep for mileage claims?
Keep a detailed mileage log recording for each business journey: date, start location, end location, business purpose, miles travelled, and annual total business miles. Also retain evidence of any employer reimbursement (payslips, mileage claim forms). HMRC may request these records for up to 6 years to verify your claim.
Digital tracking apps, handwritten logbooks, or employer timesheets all work. The key is contemporaneous records made at the time of travel - reconstructing journeys years later looks suspicious. Note that commuting miles don't count, so maintain clear separation. Without adequate records, HMRC can reject claims entirely.
Data Sources and Calculation Accuracy
This calculator uses official UK government figures and HMRC guidance for 2026/27:
- Mileage Rates 2026/27: HMRC Travel Mileage and Fuel Allowances
- Tax Relief Process: HMRC Tax Relief for Employees
- Form P87 Guidance: HMRC Form P87 Instructions
- Income Tax Rates: HMRC Income Tax Rates and Allowances
Calculation Methodology
Our calculator multiplies business miles by HMRC approved rates to determine total allowance. It subtracts employer reimbursement to find unreimbursed shortfall, then multiplies by your tax rate to calculate relief. For cars exceeding 10,000 miles, we apply 45p to first 10,000 and 25p to remainder. All currency rounded to 2 decimal places.
Last Updated: January 2026 | Tax Year: 2026/27
⚠️ Important Disclaimer
This calculator provides estimates for informational purposes only. Results are based on information you provide and current HMRC guidance. Actual tax relief depends on your specific circumstances, accurate record-keeping, and HMRC verification. We recommend keeping detailed mileage logs and consulting HMRC or a qualified tax advisor before making claims. FastJobs.uk is not responsible for errors, omissions, or claims based on calculator results.
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