Company Car Mileage Claims and Rates in the UK (2026 Guide)

Thousands of UK employees leave money on the table every year by not claiming business mileage correctly. Whether you drive a company car or use your own vehicle for work, HMRC has specific rates that determine what you can claim — and the amounts can add up to hundreds or even thousands of pounds per year.

The rules are different depending on whether you drive a company car (advisory fuel rates apply) or your own car (approved mileage allowance payments apply). This guide covers both, with current 2026 rates and step-by-step instructions for claiming.

1. HMRC Advisory Fuel Rates (Company Car Drivers)

If you have a company car and your employer pays for fuel, HMRC publishes advisory fuel rates that are used to calculate mileage reimbursements. These rates are updated quarterly (March, June, September, December).

As of March 2026, the rates are:

These rates work two ways:

• Employer reimburses you: If you pay for fuel on business journeys in a company car, your employer can reimburse you at these rates tax-free
• You reimburse your employer: If your employer pays for all your fuel (including private use), you should reimburse them at these rates for private mileage to avoid a fuel benefit charge

2. Approved Mileage Allowance Payments (Own Car Drivers)

If you use your own car (not a company car) for business journeys, the rates are much more generous:

The 45p/25p rate is the same for all car engine sizes and fuel types. These rates cover all running costs including fuel, insurance, depreciation, maintenance, and road tax. They haven't changed since 2012.

3. How to Track Your Business Mileage

HMRC requires you to keep records of business mileage to support any claims. You need:

• Date of each journey
• Start and end locations
• Purpose of the journey
• Miles driven

You can track this using:

• Mileage tracking apps: MileIQ, Driversnote, and TripLog are popular options that track journeys automatically via GPS
• Spreadsheet or logbook: A simple Excel spreadsheet or paper logbook works fine for HMRC purposes
• Employer expense system: Many companies have mileage claim forms built into their expense reporting tools

Whatever method you use, keep records for at least 6 years — HMRC can ask to see them at any time during this period.

4. Claiming Tax Relief on Business Mileage

If your employer pays you less than the AMAP rate (or doesn't pay you anything at all), you can claim tax relief on the difference. This is called Mileage Allowance Relief (MAR).

For example, if you drove 8,000 business miles and your employer paid you 25p/mile:

• AMAP rate: 8,000 × 45p = £3,600
• Employer paid: 8,000 × 25p = £2,000
• Shortfall: £1,600
• Tax relief at 20%: £320 refund
• Tax relief at 40%: £640 refund

You can claim via self-assessment tax return or by writing to HMRC using form P87 (if your claim is under £2,500). You can also claim online through your personal tax account.

5. Passenger Payments

If you carry a colleague as a passenger on a business journey, you can claim an additional 5p per mile per passenger. This is on top of the standard 45p/25p rate.

For example, if you drive 100 business miles with two colleagues as passengers: 100 miles × 5p × 2 passengers = £10 extra tax-free.

This often goes unclaimed because people don't know about it. If you regularly car-share to meetings or client visits, it's worth tracking.

6. Electric Vehicle Advisory Rate

The HMRC advisory rate for fully electric company cars is currently 7p per mile. This is used for:

• Reimbursing EV company car drivers for business mileage
• Calculating how much an EV company car driver should reimburse for private fuel if their employer covers charging

This rate is significantly lower than petrol/diesel advisory rates, reflecting the lower cost of electricity vs fossil fuels. At typical home electricity rates and EV efficiency, 7p/mile more than covers the actual cost of charging.

Important: If you use your own electric car (not a company car), you still claim the standard AMAP rate of 45p/25p per mile — not the 7p advisory rate. The advisory rates are only for company cars.

7. What Counts as Business Mileage

This is where many people go wrong. Not all work-related driving counts as business mileage:

The key distinction is between your permanent workplace (not business mileage) and temporary workplaces (business mileage). If you work at one office every day, driving there is commuting. If you visit a different client site each week, those journeys are business mileage.

8. Keeping Records for HMRC

HMRC can ask to see your mileage records during a compliance check or tax investigation. Here's what they'll want:

• A contemporaneous record — recorded at the time of the journey, not reconstructed later
• Date, from, to, purpose, miles for each journey
• Annual totals for business and private mileage
• Fuel receipts if claiming actual fuel costs rather than mileage rates

Keep all records for at least 6 years. Digital records (apps, spreadsheets) are perfectly acceptable — you don't need paper logs.

Final Thoughts

Business mileage claims are one of the easiest tax benefits to overlook — and one of the simplest to claim. If you use your own car for work, the 45p/mile AMAP rate for the first 10,000 miles can be worth thousands per year. If your employer pays less than this rate, you're entitled to claim tax relief on the difference.

Company car drivers have lower advisory rates but should still ensure they're being reimbursed correctly for business fuel. And everyone should remember to track their mileage properly — HMRC will want to see records if they ever ask.

HMRC rates are reviewed quarterly (advisory) or periodically (AMAP). Always check the latest rates at gov.uk/advisory-fuel-rates.

Related reading: Company Car vs Car Allowance | BIK Tax Explained