UK HMRC Mileage Rates and Allowances for 2025

What is a car mileage allowance?

A car mileage allowance is designed to fairly compensate individuals for the costs accrued using their private vehicles for business purposes. This compensation is designed to cover things like fuel, wear and tear, insurance, and maintenance.

The HMRC mileage allowance is a tax-free rate set by the UK government to reimburse employees or self-employed individuals for business-related travel. 

What are HMRC Mileage Allowance Payments? (MAP)

Mileage Allowance Payments (MAPs) are the payments that employers make to reimburse employees travelling for work. These can be lump sums, fixed rates per mile or reimbursement for actual expenditure.

MAPs up to a certain threshold are not taxed, these are known as AMAPs, Approved Mileage Allowance Payments. Payments that exceed these thresholds may be subject to tax.

The Mileage Rate for 2025 in the UK

AMAP mileage rates vary depending on the vehicle being used and the amount of miles covered in a year. As it stands 2025 rates for cars and vans are identical to the mileage rate for 2024, in fact, basic rates have remained the same for over 13 years.

Here’s what you can expect to be reimbursed for business travel in 2025.

Cars and vans Mileage Rates

The mileage rate for personally owned cars and vans used for business can vary depending on the total mileage for the year. For 2025, HMRC mileage rates are:

• 45p/mile (First 10,000 miles covered)
• 25p/mile (Each mile over the first 10,000)

This same rate applies for personally owned electric cars.

The HMRC 10,000 mile threshold

For cars and vans, a 10,000 mile threshold applies to mileage covered. For the first 10,000 miles, 45p/mile is the standard rate. For any miles covered beyond the first 10,000, the rate is 25p/mile.

When it comes to reimbursement, company cars are slightly different. The rates are often based on fuel type and engine size.

Petrol

Up to 1400(cc) - 13p/mile

1401-2000(cc) - 15p/mile

2000+(cc) - 24p/mile

Diesel

Up to 1600(cc) - 12p/mile

1601-2000(cc) - 14p/mile

2000+(cc) - 18p/mile

As of 1 September 2024, the advisory rate for electric company cars is 7p/mile for all engine sizes.

Motorcycles mileage rate

The recommended rate for a personally owned motorcycle is 24p/mile (for all mileage).

Bicycles mileage rate

For a bicycle, the recommended HMRC mileage rate is 20p/mile (for all mileage).

What can be reimbursed by Mileage Allowance?

The reimbursement is designed to cover a few essential expenses including:

• Fuel costs
• Vehicle maintenance and repairs
• Insurance for business travel
• Depreciation

How are Mileage Tax Rates calculated?

A fixed number for HMRC mileage rates and allowances makes calculations simple. 

Suppose you drive 8,000 miles for work in a year. Here's how you might calculate your reimbursement:

8,000 miles × 45p = £3,600 (reimbursed tax-free)

How to apply the Business Mileage Rates

If you’re an employer

Employers can provide Mileage Allowance Payments (MAPs) to employees to reimburse them for business travel in their private vehicles.Employers should keep clear records of reimbursements and mileage for any future auditing.

If you’re an employee

If you are an employee and your employer reimburses less than the HMRC-approved mileage rate, you can claim tax relief on the difference. This ensures you aren’t penalised for receiving less than the standard allowance. 

The process involves submitting a claim through your self assessment tax return or, in some cases, by using HMRC’s P87 form.

If you’re self employed

People who are self employed can deduct business mileage from their taxable income when completing their self assessment tax returns. 

Using the standard calculation of “miles covered x mileage rate = total deductible” is a simple way to make sure that business mileage is properly accounted for.

Keeping a mileage log

Keeping an accurate log of your mileage will make it easier to claim for reimbursements and relief on your business mileage.

Whether you’re an employer, freelancer, or self-employed worker, keeping a log means that you can  easily calculate reimbursements and provide any evidence if it’s required for auditing.

Automated Mileage tracking and logging

There are lots of tools that can be used for tracking mileage and staying on top of business expenses. Many banking and accounting apps have built-in mileage trackers and ways to categorise expenses.

FAQ

When do trips qualify for tax-free Mileage Allowances?

Trips qualify for tax-free mileage allowances if they meet HMRC’s criteria for business travel. 

This criteria includes:

• Travel between workplaces: Driving from one work location to another to carry out your working responsibilities.
• Client or customer visits: Journeys made to meet clients or attend meetings.
• Temporary workplaces: Travel to a location where you are expected to work for less than 24 months.

Commuting (from home to your permanent place of work) is not included.

Can I claim Mileage Allowance if I am self employed?

Yes. Self- employed workers can claim mileage allowance. This is reimbursed differently to traditional employees and is deducted from taxable income as a business expense.

Can I use a different Mileage Allowance to the standard?

Employers are permitted flexibility to set their own mileage reimbursement rates. Choosing to do this can mean additional considerations.

If the rate is below HMRC’s approved rate employees may claim tax relief on the difference.

If the rate is above HMRC’s approved rate the excess amount is treated as a benefit in kind (BIK), and is therefore subject to Income Tax and National Insurance contributions.

What’s the best way to reimburse my employees?

Reimbursing employees using HMRC’s approved mileage rates is the most tax-efficient approach.

Payments up to the standard rates are tax-free, meaning neither the employer nor the employee incurs additional tax or National Insurance contributions.

You can make the process as simple as possible by using a proper mileage tracking system and encouraging employees to record their business mileage.

How does HMRC mileage work for multiple vehicles?

HMRC’s mileage rates apply equally whether you use one or several private vehicles for business purposes.

For example, you may do 6,000 miles in a van and 2,000 miles in a car, all 8,000 miles will be reimbursed at 45p/mile.

Keeping an accurate log of mileage for all vehicles (including the type of vehicle) is useful for the business’s records.