For the 2026/27 tax year, the standard HMRC-approved mileage rate for an employee using their own car or van is 55p per business mile for the first 10,000 miles and 25p per mile thereafter. The 55p rate applies retrospectively from 6 April 2026, replacing the previous 45p rate.
However, these figures are tax-approved reimbursement rates, not compulsory prices. A self-employed professional or business may charge clients more or less if the rate is clearly agreed in advance.
What Are the UK Mileage Rates for 2026/27?
The approved rates depend on the type of vehicle and the number of qualifying business miles travelled during the tax year.
| Vehicle | First 10,000 business miles | Business miles above 10,000 |
| Car or van | 55p per mile | 25p per mile |
| Motorcycle | 24p per mile | 24p per mile |
| Bicycle | 20p per mile | 20p per mile |
The 10,000-mile threshold applies across the tax year rather than separately to each journey. If an employee uses more than one personal car or van, the qualifying mileage is normally combined when calculating the approved amount.
Businesses may also pay an additional 5p per passenger per business mile when an employee carries another employee in their own car or van on a qualifying work journey.
How Much Should a Business Charge Clients for Mileage?
There is no statutory mileage price that every UK business must charge its clients. Businesses are free to establish their own commercial travel rates.
Many businesses use 55p per mile because it is easy to understand and reflects the current HMRC benchmark. However, a higher rate could be reasonable where a journey involves:
- An expensive or specialist vehicle
- Significant wear and depreciation
- Heavy equipment or materials
- Rural or difficult-to-reach locations
- High parking or congestion costs
- Considerable travelling time
- Short-notice or out-of-hours appointments
A business might instead charge a fixed travel fee, recover the actual cost or include routine travel within its normal service price.
The chosen approach should be explained in the quotation, contract or terms of business before work begins. This prevents disputes over return mileage, parking, tolls and travel time.
Is 55p Per Mile Compulsory?
No. The 55p rate is an HMRC-approved amount for the first 10,000 qualifying miles in a privately owned car or van. It is not a mandatory commercial charging rate.
The distinction is important:
- Employee reimbursement: An employer decides how much to reimburse, but the approved rate determines the amount that can normally be paid tax-free.
- Self-employed expense claim: An eligible sole trader or partnership may use the simplified mileage rate when calculating allowable vehicle expenses.
- Client mileage charge: A business and its client can agree any reasonable rate.
- Company car reimbursement: Different advisory fuel rates normally apply because the business already provides the vehicle.
Businesses should not describe the HMRC rate as a fixed legal charge. It is primarily a tax benchmark.
How Do You Calculate a Mileage Charge?
Multiply the number of qualifying miles by the agreed rate.
For example, if a consultant completes a 120-mile return journey and charges 55p per mile:
120 miles × £0.55 = £66
The consultant would add a £66 mileage charge to the invoice, subject to the agreed terms and any applicable VAT.
Example for More Than 10,000 Miles
Suppose an employee drives 12,000 qualifying business miles in their own car during the 2026/27 tax year.
| Calculation | Amount |
| First 10,000 miles × 55p | £5,500 |
| Remaining 2,000 miles × 25p | £500 |
| Total approved amount | £6,000 |
The approved amount for the year would therefore be £6,000.
The lower rate only applies after the individual has exceeded 10,000 qualifying miles. It does not automatically apply to every long-distance journey.
What Does the Mileage Rate Cover?
The approved mileage rate is designed to represent more than the fuel used during a journey. It contributes towards the general cost of owning and operating the vehicle, including:
- Petrol, diesel or electricity
- Vehicle insurance
- Servicing and maintenance
- Repairs and replacement parts
- Vehicle Excise Duty
- MOT testing
- Depreciation
- General wear and tear
This is why the approved rate can be significantly higher than the cost of fuel alone.
A sole trader using simplified mileage expenses cannot normally claim fuel, insurance, repairs and servicing separately for the same vehicle. Further details about the choice between mileage and actual costs can be found when considering self-employed van expenses.
Can Parking and Tolls Be Charged Separately?
Parking fees, road tolls, congestion charges and similar journey-specific costs can normally be charged or claimed separately if they relate entirely to business travel.
Whether these amounts can be passed to the client depends on the contract. A clear travel policy might state that:
- Mileage is charged at 55p per mile
- Parking and tolls are charged at cost
- Travel time is charged separately
- Receipts will be provided where available
- Fines and penalties remain the driver’s responsibility
Parking fines, speeding penalties and other legal penalties are not allowable business expenses merely because they were incurred during a work journey.
Which Journeys Count as Business Mileage?
A journey generally counts as business mileage when it is necessary for carrying out work duties. Examples include:
- Visiting a client
- Travelling between workplaces
- Attending an off-site meeting
- Visiting a supplier
- Travelling to a temporary workplace
- Collecting business equipment
- Making deliveries
- Attending a work-related event or training session
Ordinary commuting between home and a permanent workplace is generally private travel. Personal journeys and private detours must also be excluded.
For a home-based business, travel from the business base to a customer, supplier or temporary work location may qualify. The circumstances should be reviewed carefully, especially where the person regularly works at another fixed location.
Drivers should also confirm that their policy covers work-related journeys. Standard commuting cover may not be sufficient for client visits, deliveries or travel between multiple workplaces, making appropriate business-use car insurance important.
Can Self-Employed People Charge 55p Per Mile?
A self-employed person can charge a client 55p per mile, but the amount charged and the amount claimed for tax are separate calculations.
For example, a contractor could:
- Charge a client 65p per mile under the contract.
- Record the full 65p per mile as business income.
- Claim an allowable vehicle expense using the simplified mileage method or actual-cost method, where eligible.
Charging a client for travel does not prevent the contractor from claiming an allowable expense. However, the mileage payment received should not simply be removed from the accounts. It is normally business income, while the allowable mileage or vehicle cost is recorded separately as an expense.
Simplified Mileage or Actual Vehicle Costs?
Eligible sole traders and partnerships can generally choose between two methods.
Simplified Mileage Expenses
Under this method, the business records qualifying miles and applies the appropriate flat rate. It is straightforward and reduces the need to calculate the business proportion of every vehicle bill.
The rate already covers the main ownership and running costs, so these cannot also be claimed separately for the same vehicle.
Actual Vehicle Costs
The business records its actual costs, including fuel, insurance, repairs, servicing and other allowable expenses. It then claims the proportion relating to business use.
This method may produce a larger deduction for an expensive vehicle with high running costs, but it requires more detailed records.
Once simplified mileage or capital allowances have been used for a particular vehicle, the business may have to continue with that method while the vehicle remains in use. The choice should therefore be considered before submitting the first claim.
Reliable small-business bookkeeping makes it easier to compare the methods and support the figures reported on a tax return.
What Happens if an Employer Pays Less Than 55p?
An employer can reimburse employees at less than the approved mileage rate. However, an employee may be able to claim Mileage Allowance Relief on the difference.
Suppose an employee drives 1,000 qualifying miles and receives 40p per mile:
| Calculation | Amount |
| Approved amount: 1,000 × 55p | £550 |
| Amount reimbursed: 1,000 × 40p | £400 |
| Unused mileage allowance | £150 |
The employee does not usually receive the full £150 from HMRC. Instead, tax relief is calculated on that amount at the employee’s applicable Income Tax rate. A basic-rate taxpayer receiving relief at 20% could reduce their tax by £30.
What Happens if an Employer Pays More Than 55p?
An employer may pay more than the approved rate, but the excess will not automatically be tax-free.
For example, if an employee is paid 60p per mile when the approved rate is 55p, the additional 5p per qualifying mile may need to be treated as taxable earnings and reported through the appropriate payroll or benefits process.
Paying a higher rate is not prohibited. The employer simply needs to apply the correct tax and National Insurance treatment to the excess.
Can Employees Claim an Extra 5p for Passengers?
An employer may pay an additional 5p per mile when an employee carries another employee in their own car or van on a qualifying business journey.
For example:
- Standard car mileage rate: 55p
- One qualifying passenger: additional 5p
- Possible total reimbursement: 60p per mile
The passenger must also be travelling for work. The additional rate does not usually apply when carrying customers, family members or friends.
Unlike the main mileage allowance, an employee cannot normally claim Mileage Allowance Relief if the employer does not provide the passenger payment.
Do Electric Cars Receive a Different Mileage Rate?
A privately owned electric car generally receives the same approved mileage rate as a petrol or diesel car:
- 55p per mile for the first 10,000 qualifying miles
- 25p per mile thereafter
This is because the approved rate covers the wider cost of owning and operating the vehicle, not only electricity.
Company-owned electric cars are treated differently. Employers normally use the applicable advisory electric rate when reimbursing electricity used for company-car business journeys. Separate rates may apply to home and public charging, and these figures are reviewed periodically.
How Does Mileage Work for Company Cars?
The 55p rate is intended for employees using their own cars or vans. It should not automatically be used when an employee drives a company car.
For a company car, the employer generally reimburses only the business fuel or electricity. Advisory fuel rates vary according to:
- Fuel type
- Engine size
- Charging location for electric cars
- The period in which the journey occurred
These rates are reviewed quarterly. Businesses should use the figure applying on the date of travel and keep evidence where a higher reimbursement rate is used because the actual fuel cost was greater.
Should VAT Be Added to a Client Mileage Charge?
If a business is VAT registered, mileage recharged to a client is usually part of the business’s supply rather than a separate VAT-free disbursement. VAT will normally be applied to the full mileage charge at the same rate as the main service.
For example, if a VAT-registered consultant charges £55 for mileage and the main service is subject to 20% VAT, the invoice would normally show:
- Mileage charge: £55
- VAT at 20%: £11
- Total mileage-related charge: £66
Travel undertaken by the supplier is generally the supplier’s own business cost, even when it is shown separately on an invoice. Genuine disbursements have strict conditions and are comparatively uncommon for ordinary mileage.
A business that is not VAT registered does not add VAT to its mileage charges.
How Should Mileage Be Shown on an Invoice?
Mileage should be presented clearly enough for the client to understand the calculation. A suitable invoice description could include:
Client-site travel: 80 business miles at 55p per mile — £44
Where relevant, the invoice may also list:
- Journey date
- Starting point and destination
- Reason for travel
- Return mileage
- Parking fees
- Tolls or congestion charges
- Travel time
- Applicable VAT
The invoice should follow the rate and terms previously agreed with the client.
What Mileage Records Should a Business Keep?
A reliable mileage log should include:
- Date of travel
- Starting location
- Destination
- Business purpose
- Number of business miles
- Vehicle used
- Amount reimbursed or charged
- Parking and toll receipts
- Names of qualifying employee passengers
- Supporting client or appointment details
A mileage total without journey details may be difficult to support during a tax check. Records should be updated regularly rather than reconstructed at the end of the year.
Mileage-tracking software can be useful, but a spreadsheet or paper log may also be adequate if it is complete and accurate. Businesses looking to organise expenses digitally may consider suitable free accounting software.
How Should a Business Set Its Mileage Policy?
A written mileage policy should answer the following questions:
- Which journeys qualify as business travel?
- What is the rate per mile?
- Does the rate fall after 10,000 miles?
- Are return journeys included?
- Is travel time chargeable?
- Are parking and tolls reimbursed separately?
- What evidence must be submitted?
- How quickly must claims be made?
- How are company cars treated?
- Is VAT added to client recharges?
The policy can use the approved mileage rates for simplicity, but it should be reviewed when tax rules or operating costs change.
Common Mileage-Charging Mistakes
Businesses and drivers should avoid:
- Treating ordinary commuting as business travel
- Claiming fuel separately after using simplified mileage
- Applying the private-car rate to a company car
- Forgetting that client mileage charges are business income
- Using the old 45p rate for the 2026/27 tax year
- Claiming private detours
- Failing to record the purpose of each journey
- Charging clients without agreeing the rate
- Forgetting VAT on mileage recharges
- Claiming fines as business expenses
Accurate records and clearly written terms reduce the likelihood of tax errors and client disputes.
Is 55p Per Mile Enough?
For many journeys, 55p per mile provides a practical benchmark. Whether it covers the true cost depends on the vehicle, annual mileage, fuel efficiency, depreciation and location.
A small, economical car may cost less than 55p per mile to operate. A large van, specialist vehicle or frequently repaired car could cost considerably more.
A business setting a commercial charge should calculate its actual cost per mile by considering:
- Annual vehicle depreciation
- Insurance and road tax
- Servicing and repairs
- Fuel or electricity
- Tyres and consumables
- Expected annual business mileage
- Administration and travel time
The result can then be compared with the approved rate. The business may use 55p for convenience or adopt a higher contractual charge where justified.
Conclusion
For the 2026/27 tax year, 55p per mile for the first 10,000 business miles and 25p thereafter is the main UK benchmark for privately owned cars and vans. Motorcycles qualify at 24p and bicycles at 20p per mile.
Businesses can use these rates for employee reimbursements or as a starting point when pricing client travel. However, client charges remain a commercial decision. The rate, qualifying journeys, additional expenses and VAT treatment should be agreed clearly and supported by accurate mileage records.
Frequently Asked Questions
How Much Should a Self-employed Person Charge Per Mile?
Many self-employed professionals charge 55p per mile, but there is no compulsory client rate. A higher or lower price can be agreed depending on the vehicle, distance and travel costs.
What is the Mileage Rate for 2026/27?
The approved rate for a privately owned car or van is 55p per mile for the first 10,000 qualifying miles and 25p thereafter.
When Did the Mileage Rate Increase From 45p to 55p?
The increase applies retrospectively from 6 April 2026. The 45p rate applies to tax years ending before that date.
Can a Business Charge £1 Per Mile?
Yes, provided the client has agreed to the charge. However, an employee reimbursement above the approved amount may create tax and reporting obligations.
Can Fuel Be Claimed as Well as Mileage?
Not when a self-employed person uses simplified mileage for the same vehicle. The flat rate already includes fuel and the main vehicle running costs.
Can Parking Be Added to a Mileage Claim?
Qualifying business parking, tolls and congestion charges can generally be claimed or charged separately. Fines and penalties cannot normally be treated as allowable expenses.
Is Mileage Charged for Both Directions?
Return mileage may be charged if the complete journey is undertaken for the client and the contract permits it. The basis of the charge should be agreed before travelling.
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