Legislation
Mileage allowance payments 2025-2026
Date
Effective April 6 2025
Summary
Mileage allowance payments are tax-free reimbursements for employees using their own vehicles for business travel. These payments cover costs like fuel, wear and tear, and insurance.
HMRC sets approved rates (e.g. 45p per mile for cars up to 10,000 miles), and payments within these limits are tax-free.
You can also pay an extra 5p per mile for each passenger, as long as they’re also an employee travelling for work. Anything above the approved rates must be reported and may be taxable.
Here are the current mileage allowance payments:
| Vehicle | First 10,000 miles | Over 10,000 miles |
|---|---|---|
| Privately Owned Cars and Vans | 45p | 25p |
| Bicycle Rate | 20p | 20p |
| Motorcycle Rate | 24p | 24p |
| Passenger Rate (each) | 5p | 5p |
Tax fact card 2025 – 2026
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