As an employer, you have certain tax, National Insurance and reporting obligations if you cover the costs of your employees using their own vehicles for business travel.
\n\nThere are 2 separate schemes used to deal with these mileage expenses - one for tax and one for National Insurance.
\n\n","slug":"overview","title":"Overview"},{"body":"If you make payments to employees above a certain amount, you’ll have to report them to HM Revenue and Customs (HMRC) and deduct and pay tax.
\n\nMileage Allowance Payments (MAPs) are what you pay your employee for using their own vehicle for business journeys.
\n\nYou’re allowed to pay your employee a certain amount of MAPs each year without having to report them to HMRC. This is called an ‘approved amount’.
\n\nYou can also pay the approved amount of MAPs to your employee if they use their own car to do volunteer work related to coronavirus (COVID-19). You must report and pay tax through a PAYE Settlement Agreement as a COVID-19 related benefit.
\n\nTo calculate the ‘approved amount’, multiply your employee’s business travel miles for the year by the rate per mile for their vehicle.
\n\nUse HMRC’s MAPs working sheet if you need help.
\n\n| \n | First 10,000 miles | \nAbove 10,000 miles | \n
|---|---|---|
| Cars and vans | \n55p from 6 April 2026 (45p before 6 April 2026) | \n25p | \n
| Motorcycles | \n24p | \n24p | \n
| Bikes | \n20p | \n20p | \n
The rates for electric bikes are:
\n\nIt does not matter if your employee uses more than one vehicle in a year - it’s all calculated together.
\n\nExample
\n\nYour employee travels 12,000 business miles in their car - the approved amount for the year would be £5,000 (10,000 x 45p plus 2,000 x 25p).
\nYou must:
\n\nYou will not have to report to HMRC or pay tax, but:
\n\nYou might have to deduct and pay National Insurance on payments relating to relevant motoring expenditure (RME), which includes:
\n\nA certain amount of RME will be exempt from reporting to HM Revenue and Customs (HMRC) or paying National Insurance on. This is called the ‘qualifying amount’.
\n\nTo calculate out the ‘qualifying amount’, multiply your employee’s business miles in the earning period by the rate per mile, shown in the table below.
\n\n| Type of vehicle | \nEvery business mile | \n
|---|---|
| Cars and vans | \n55p from 6 April 2026 (45p before 6 April 2026) | \n
| Motorcycles | \n24p | \n
| Bikes | \n20p | \n
The rates for electric bikes are:
\n\nExample
\n\nYour employee drives 1000 miles in their van, and you make a payment of RME to cover this. The qualifying amount for the earnings period would be £550 (1,000 x 55p).
\nIf the RME you provide to your employee in the earnings period exceeds the qualifying amount:
\n\nIf the RME is below the qualifying amount, you have:
\n\nThere’s no Mileage Allowance Relief for National Insurance, and you cannot carry forward the difference between RME and the qualifying amount to a later earnings period.
\nIf your employee carries another employee in their own car or van on a business journey, you can pay them passenger payments of up to 5p per mile tax-free.
\n\nYou will not have to report this to HM Revenue and Customs (HMRC) or deduct and pay National Insurance on them either.
\n\nThere’s no equivalent to Mileage Allowance Relief (MAR) for passenger payments.
\nThe following guides contain more detailed information:
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