Mileage Allowance Increase

The Mileage Allowance is a tax‑free payment an employer can make to an employee for using their own car for business journeys. It is limited to a set amount per mile each year. 

 

For every mile you drive for genuine business purposes – for example visiting a client or travelling to a job site – your employer can pay you the Mileage Allowance without you being taxed on it. 

 

You cannot claim Mileage Allowance for your normal commute to and from your usual workplace, and it only applies when you use your own vehicle. You also cannot claim any additional vehicle costs such as fuel, maintenance or repairs, because these are already included in the Mileage Allowance rate per mile. 

To put it simply, the Mileage Allowance applies to any employee who uses their own private vehicle to make business journeys. 

 

In more complicated terms, the HMRC Approved Mileage Allowance Payments rates apply to any employees who use their own privately owned electric, petrol, diesel, etc. vehicles for business mileage. These do not apply to company‑supplied vehicles, where the HMRC advisory rates should be used instead, depending on whether they are petrol/diesel/hybrid or fully electric. 

For cars and vans, you can also receive an extra tax‑free payment of up to 5p per business mile for each colleague you carry as a passenger on the same business journey, provided the journey is for work and you keep a clear record of it.