What Are the Latest HMRC Mileage and Fuel Allowance Rates

Mileage allowance rates and advisory fuel rates are two of the most important sets of figures for anyone who travels for business in the UK. Employees use them when claiming reimbursement. Self employed people use them to calculate allowable expenses. Employers rely on them to make sure payments are tax free and compliant. Company car users need them to avoid benefit in kind issues. Each year these rates are refreshed and it is essential to keep up to date.

This guide explains the current HMRC mileage allowance payments, the latest advisory fuel rates for company cars, how electric vehicle mileage is treated, how to use the rates correctly, and what mistakes to avoid. In my opinion understanding these rates properly saves time, prevents tax errors, and ensures no one pays more in tax than they need to.

Understanding the Two Types of Rates

Before looking at the actual figures it helps to understand the difference between HMRC’s two systems.

Mileage Allowance Payments (MAPs)

These apply when someone uses their own personal vehicle for business travel. The rates cover fuel, insurance, wear and tear, and running costs. If an employer reimburses mileage at or below the HMRC rate there is no tax or National Insurance for the employee.

Advisory Fuel Rates (AFRs)

These apply to company cars. AFRs cover fuel only. They are used when an employer reimburses business fuel or when an employee repays private fuel to avoid a benefit in kind charge.

Using the wrong type of rate is a common mistake which can lead to incorrect claims or unexpected tax issues.

The Latest Mileage Allowance Payment Rates

These rates apply to employees using their own vehicle for business travel and to self employed individuals using the simplified mileage method.

Cars and vans

• 45p per mile for the first 10,000 business miles in a tax year

• 25p per mile for any additional miles after 10,000

Motorcycles

• 24p per mile (no 10,000 mile limit)

Bicycles

• 20p per mile

Passenger payments

• 5p per mile for carrying another employee on the same business journey

These rates do not change often and are designed to be simple to apply.

Important rules for MAPs

• Mileage must be business mileage not commuting.

• The journey must be necessary for work and not for personal reasons.

• Start and end points must be recorded.

• You cannot claim mileage and fuel receipts. You must choose one method.

• Once you choose the mileage method for a vehicle you must continue using it for that vehicle.

In my opinion mileage rates make life far easier than tracking fuel, insurance, repairs, and depreciation.

The Latest Advisory Fuel Rates for Company Cars

Advisory fuel rates change several times per year to reflect fuel price movements. They apply only to company cars not private vehicles.

The latest rates are:

Petrol cars

• Up to 1,400cc: 12p per mile

• 1,401cc to 2,000cc: 14p per mile

• Over 2,000cc: 22p per mile

Diesel cars

• Up to 1,600cc: 12p per mile

• 1,601cc to 2,000cc: 13p per mile

• Over 2,000cc: 18p per mile

LPG cars

• Up to 1,400cc: 11p per mile

• 1,401cc to 2,000cc: 13p per mile

• Over 2,000cc: 21p per mile

Electric company cars

There are now two distinct advisory rates depending on where the vehicle is charged:

• 8p per mile when charged at home

• 14p per mile when charged at public charging stations

This reflects the cost difference between home electricity tariffs and public rapid chargers.

How to Use Mileage Allowance Rates Correctly

Mileage allowance rates are simple but only if you follow the rules. Whether you are an employer, employee, or sole trader the principles are the same.

If you are an employer

• Reimburse staff at 45p per mile up to 10,000 miles then 25p per mile

• Payments at or below the rate are tax free

• If you pay more than the HMRC rate the extra is taxable

• Keep mileage logs in case HMRC asks for evidence

• Use timesheets or apps to record journeys accurately

If you are self employed

• Multiply your business miles by the correct rate

• Claim the result as an allowable expense

• Do not claim fuel or car repair receipts on top

• Keep a mileage log with dates, locations, and purposes

• For mixed journeys record only the business portion

If you are an employee claiming tax relief

• If your employer pays less than the HMRC rate you can claim the difference

• This is done through a tax return or HMRC’s online system

• You cannot claim if your employer pays the full rate

In my opinion mileage is one of the simplest ways for a sole trader to calculate motor expenses.

How to Use Advisory Fuel Rates Correctly

AFRs only apply to company cars. They are not used for private vehicles.

When to use AFRs:

• When your employer reimburses fuel for a company car

• When you repay private fuel to avoid a benefit in kind charge

• When you need to calculate business fuel for a pooled company car

• When the employer pays for fuel cards or fuel allowances

Paying back private fuel

If your employer pays for all your fuel including personal use you will face a fuel benefit charge unless you repay the private element. AFRs are used to calculate the repayment.

Reimbursing business fuel

If an employer reimburses more than the AFR for business travel the excess may become taxable.

Hybrid cars

Hybrid vehicles follow the petrol or diesel rates depending on their engine type.

Electric company cars

Electric vehicles use the 8p or 14p rates depending on charging location. These rates apply only to company owned vehicles.

AFRs ensure neither the employer nor the employee gains or loses financially through underpaying or overpaying for fuel.

Common Mistakes Employers Make

1. Paying the wrong rates

Using AFRs for private vehicles or using MAPs for company cars is a common error.

2. Reimbursing more than the HMRC rate

Anything above the official rate becomes taxable and creates extra payroll admin.

3. Not keeping mileage evidence

HMRC can request logs at any time. Without evidence claims can be disallowed.

4. Paying mileage for commuting

Commuting is not business travel and cannot be claimed.

5. Not updating rates when HMRC changes them

AFRs change regularly. Employers must check the latest rate each quarter.

6. Failing to split electric vehicle charging rates

Home charging and public charging now have different rates. Many employers still use one combined figure.

7. Paying fuel allowances without checking tax implications

Flat fuel allowances often trigger benefit in kind charges unless calculated carefully.

Avoiding these mistakes keeps reimbursement simple and tax free.

How Electric Vehicles Fit Into HMRC Mileage Rules

Electric vehicles are treated differently depending on whether they are privately owned or company owned.

Private electric vehicles

Self employed people and employees using their own EV can still claim the standard mileage rate of:

• 45p per mile up to 10,000 miles

• 25p per mile after that

This is because MAPs cover the full running cost of the vehicle including electricity.

Company electric vehicles

AFRs apply:

• 8p per mile for home charging

• 14p per mile for public charging

These are fuel only rates because the employer owns the vehicle.

Electric vehicles are one of the most misunderstood areas of mileage. In my opinion they are simpler than people assume once you understand the private versus company distinction.

How to Keep Proper Mileage Records

A good mileage record should include:

• Date of journey

• Starting point

• Destination

• Purpose of journey

• Miles travelled

• Vehicle used

You can record mileage using:

• A notebook

• A spreadsheet

• A mileage app

• Your accounting software

• Telematics or GPS logs

If you are ever audited HMRC will need to see these records. They do not accept estimates or rounded figures.

Claiming Mileage as a Limited Company Director

If you are a company director using your own car you can still claim HMRC mileage rates.

The company pays you:

• 45p per mile up to 10,000 miles

• 25p per mile beyond that

This is tax free and the company gets a corporation tax deduction.

If the company reimburses less you can claim the difference through your tax return.

If the company owns the vehicle you must use the AFR rates instead.

Can you claim mileage if you work from home

Yes but only if your home is your permanent workplace for tax purposes. If you regularly work from home and travel to temporary workplaces mileage can be claimed.

You cannot claim mileage for travelling from home to a permanent workplace unless home is your base of operations.

Real Examples

Example 1: Employee using their own car

Sarah drives 3,000 business miles per year. Her employer reimburses her 45p per mile. She receives £1,350 tax free.

Example 2: Self employed consultant

Tom drives 12,500 business miles. He claims:

• 10,000 × 45p = £4,500

• 2,500 × 25p = £625
  Total: £5,125 as a business expense.

Example 3: Company car user

Ahmed drives a diesel company car with an engine size of 1,800cc. He uses 13p per mile for business fuel reimbursement.

Example 4: Electric company car

Chloe charges at home so her business mileage is reimbursed at 8p per mile. When she uses rapid chargers on work trips her employer uses the 14p rate.

Final Thoughts

Mileage allowance rates and advisory fuel rates look simple but they are easy to apply incorrectly if you do not understand the rules. MAPs apply to private vehicles and cover the whole cost of running the car. AFRs apply to company cars and cover fuel only. Electric vehicles now have split rates that reflect home and public charging. Using the correct rate keeps reimbursements tax free and avoids benefit in kind surprises.

In my opinion businesses and individuals should review their mileage processes regularly, especially as travel patterns change and electric vehicles become more common. Mileage is one of the easiest tax reliefs to claim and one of the easiest to get wrong without clear systems.