There are two sets of mileage rates in the United Kingdom and most of the confusion about them comes from mixing them up. The approved mileage allowance payments are for an employee's own car used for business: a per-mile amount that covers the whole cost of running the car, paid tax free up to the approved figure. The advisory fuel rates are for a company car: pence per mile for the fuel only, by fuel type and engine size, that an employer can pay for business miles or a driver can repay for private miles without a tax charge. This page says which rate applies to which driver, what each covers, what happens when an employer pays above or below it, and where the worksheets on this site work the figures.
Your own car: the approved mileage allowance
If the car is yours and you drive it on business, the approved rate is 55p a mile for the first 10,000 business miles in the tax year and 25p a mile after that. The rate is the same whatever the car burns, because it stands for the whole cost of the car, fuel, depreciation, insurance, servicing and tyres, not for the fuel alone. An employer can pay up to that figure tax free; pay more and the excess is taxable pay; pay less and the driver can claim mileage allowance relief on the shortfall against their own tax.
A company car: the advisory fuel rates
If the car is the employer's, the employer already bears its cost and the only thing left to reimburse is fuel. HMRC's advisory fuel rates give a pence-per-mile figure by fuel type and engine size, with separate electricity rates for a company electric car charged at home and in public, and reviews them each quarter. Pay business miles at the advisory rate or below and there is no tax on the payment; a driver who repays private miles at the rate avoids the fuel benefit charge altogether.
When the employer pays a different rate
Paying above the approved rate on a private car makes the excess taxable pay and reportable; paying below it leaves the driver a relief claim. Paying above the advisory rate on a company car makes the excess taxable earnings unless the employer can show the true fuel cost per mile was higher, which takes fuel receipts and a mileage log; paying below it is allowed and the driver has no claim, because the advisory rate is a ceiling for tax-free payment rather than an entitlement.
Keeping the log that supports either rate
Both rates rest on a record of business miles: the date, the journey, its purpose and the miles, kept by the driver and held by the employer. Ordinary commuting between home and a permanent workplace is never business mileage under either rate. The worksheets on this site apply the right rate to the miles you enter; the log itself is what an inspector asks for.
Questions people ask about mileage rates
Which rate do I use if I have a car allowance?
The approved rate. A car allowance is cash instead of a car, so the car is yours and business miles in it attract the approved mileage allowance, not the advisory fuel rate.
Do the rates change?
The advisory fuel rates are reviewed quarterly and change with fuel prices. The approved mileage rates are set by the government and change rarely; both worksheets on this site cite the page and date they were read from.
Can I claim the difference if my employer pays less than the approved rate?
Yes, on your own car: mileage allowance relief on the shortfall between what you were paid and the approved amount, claimed through self assessment or a tax relief claim to HMRC.