The approved mileage allowance payment is the figure HMRC treats as the full cost of using an employee's own vehicle for a business mile, and everything about private-car mileage refers back to it: it caps what the employer can pay tax free, it sets what the employee can claim relief on, and it makes fuel receipts unnecessary. This page is about the rate itself rather than the claim: what it is meant to cover, why it has two tiers, how it interacts with a cash car allowance and with an employer's fuel card, and why it never applies to a company car. The worksheets on this site apply it to the miles you enter.
What the rate stands for
The whole cost of the car per business mile: fuel, depreciation, insurance, servicing, tyres and road tax, spread over the miles. That is why the same rate applies to a diesel, a petrol and an electric car, why no receipts are needed, and why an employee cannot claim actual running costs instead. It is also why the rate is higher for the first 10,000 miles, where the fixed costs weigh more, and lower after.
The current figures
For cars and vans, 55p a mile for the first 10,000 business miles in the tax year and 25p a mile above that. The National Insurance calculation uses 55p for all business miles, with no threshold, so a payment can be free of National Insurance while part of it is taxable. The figures sit on HMRC's rates and thresholds page for the year and the worksheets on this site cite that page and the date it was read.
With a car allowance or a fuel card
A car allowance is taxed as pay and leaves the car the employee's own, so business miles in it attract the approved rate in full. A fuel card for a private car is a taxable benefit or taxable pay for the fuel, against which the employee sets the approved amount for the business miles; the net position is often a relief claim. Neither arrangement changes the rate; both change what the employee has already been paid.
Never for a company car
A company car driver has no approved mileage allowance, because the employer already bears the car's cost; they are reimbursed for fuel only, at or below the advisory fuel rate. A payment to a company car driver at the private car rate is taxable pay for the part above the advisory rate, which is the mistake mixed fleets make most.
Questions people ask about approved mileage allowance payment
Is the approved rate the same for a van?
Yes, vans use the car rates. Motorcycles and bicycles have their own, lower, single rates without a threshold.
Can a self-employed person use the approved rate?
Self-employed drivers may use simplified expenses at a mileage rate instead of actual costs, on similar figures; that is a business-tax question outside this site's subject.
Does the approved rate include a passenger?
No. A separate per-mile passenger payment can be made, tax free, for a colleague carried on business travel, at the rate on the same HMRC page.