Can You Claim Tax Relief for Using Your Own Car for Work?
Using your own car for work can become expensive.
Fuel, servicing, insurance, tyres and depreciation all add up, particularly if your job involves regular travel.
If your employer reimburses you for business mileage, you may already receive some money towards those costs.
But what happens if:
- Your employer pays less than HMRC’s approved mileage rate
- Your employer pays nothing
- You are self-employed and use your own vehicle for business journeys
In some cases, you may be able to claim Mileage Allowance Relief or use HMRC’s simplified mileage rates.
For 2026/27, the mileage rate for cars and vans increased to 55p per mile for the first 10,000 business miles, with 25p per mile after that.
What counts as business mileage?
Business mileage is travel you make because of your work.
Examples can include:
- Visiting customers
- Travelling between workplaces
- Attending meetings
- Visiting suppliers
- Travelling to temporary workplaces
- Making business deliveries
Your normal commute between home and your permanent workplace generally does not count as business mileage.
So driving from home to your normal office every morning would not usually qualify simply because you use your own car.
What are the mileage rates for 2026/27?
For the 2026/27 tax year, HMRC’s approved rates are:
- Cars and vans: 55p per mile for the first 10,000 business miles
- Cars and vans: 25p per mile after 10,000 business miles
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
These rates are used when calculating approved mileage payments and Mileage Allowance Relief.
The 55p rate for cars and vans increased from 45p and applies retrospectively from 6 April 2026.
What does the 55p rate actually cover?
The mileage rate is designed as a simplified amount covering the wider cost of using your own vehicle for business.
It is not simply a fuel rate.
It broadly takes account of costs such as:
- Fuel
- Insurance
- Servicing
- Repairs
- Tyres
- Vehicle depreciation
That is why you do not normally add the cost of petrol on top of the mileage rate when using this method.
What if your employer pays the full approved rate?
Suppose you drive:
4,000 business miles
during the 2026/27 tax year.
At 55p per mile, the approved amount would be:
4,000 × £0.55 = £2,200
If your employer reimburses you the full £2,200, that payment can generally be made within the approved mileage rules without creating additional taxable income.
There would normally be no extra mileage relief left for you to claim.
What if your employer pays less than 55p?
This is where Mileage Allowance Relief becomes relevant.
Suppose:
- Business mileage: 5,000 miles
- Approved rate: 55p
- Approved amount: £2,750
- Employer pays: 30p per mile
- Employer reimbursement: £1,500
Difference:
£1,250
You may potentially claim tax relief on that £1,250 difference. HMRC confirms that employees can claim relief where their employer reimburses less than the approved amount.
Does HMRC give you the whole difference back?
No.
This is important.
You claim tax relief on the difference.
You do not normally receive the whole shortfall as a cash refund.
For example:
Mileage shortfall:
£1,250
If you are a basic-rate taxpayer paying 20% Income Tax, the tax saving could broadly be:
£250
A higher-rate taxpayer could potentially receive more relief where the qualifying amount falls within their higher-rate income.
The mileage calculation and the actual tax refund are therefore different figures.
What if your employer pays nothing?
You may still be able to claim.
Suppose you drive 3,000 qualifying business miles in your own car and receive no mileage reimbursement.
Approved amount:
3,000 × 55p = £1,650
You could potentially claim tax relief on the £1,650 qualifying amount.
Again, the actual tax saving depends on your Income Tax position.
What happens after 10,000 miles?
The rate reduces.
For cars and vans, the 2026/27 rate is:
- First 10,000 business miles: 55p
- Additional miles: 25p
For example, if you drive 12,000 business miles:
First 10,000:
10,000 × 55p = £5,500
Remaining 2,000:
2,000 × 25p = £500
Total approved amount:
£6,000
You would then compare this with how much your employer actually reimbursed.
The 10,000 miles covers your business mileage for the year
You do not normally restart the 10,000-mile threshold every time you use a different car.
HMRC states that mileage for vehicles within the same type is combined when applying the rates.
So changing cars halfway through the year does not normally give you another 10,000 miles at 55p.
What about electric cars?
The same approved mileage rates apply when an employee uses their own electric or hybrid car for business travel.
HMRC’s statutory mileage rates group electric and hybrid cars with other cars and vans for these purposes.
So for your own qualifying electric car in 2026/27, the mileage rate can still be:
55p for the first 10,000 business miles.
This is different from the advisory rates used for fuel or electricity in employer-provided company cars.
What if you use a company car?
The rules are different.
If the vehicle belongs to your employer rather than you personally, you do not use the ordinary own-car mileage rate to claim the general cost of the vehicle.
HMRC states that employees using a company car for business can potentially claim tax relief on qualifying fuel or electricity costs they personally incur, after taking account of reimbursement from the employer.
Company-car mileage therefore needs to be considered separately.
Can you claim for passengers?
Employers can potentially pay an additional 5p per business mile per passenger where you carry fellow employees in your own car or van on journeys that are also business journeys for them.
However, HMRC states there is no corresponding tax relief if your employer chooses not to pay that passenger amount.
Keep a proper mileage log
Do not simply estimate your mileage at the end of the year.
HMRC says mileage logs submitted for an employee claim should include information such as:
- Reason for the journey
- Start postcode
- End postcode
A useful mileage record could also include:
- Date
- Customer or destination
- Business purpose
- Miles travelled
- Amount reimbursed by employer
Keeping the records as you travel is much easier than reconstructing hundreds of journeys later.
Can you claim parking as well?
Parking for genuine business travel can potentially be dealt with separately from mileage.
The mileage rate relates to use of the vehicle.
Costs such as qualifying business parking are not necessarily included in the mileage calculation.
However, ordinary parking at your permanent workplace is normally connected to commuting rather than business travel.
What about tolls?
Business-related tolls and certain travel costs can also need separate treatment.
Again, they should not simply be assumed to be part of the mileage rate.
Keep receipts where appropriate.
Can you claim speeding fines?
No.
A speeding fine does not become a tax-deductible expense simply because you were driving for work when the offence occurred.
The same caution applies to other penalties arising from breaking the law.
What if you are self-employed?
Self-employed individuals can also use mileage rates under HMRC’s simplified expenses rules where eligible.
For 2026/27, the rates are:
- Cars and goods vehicles: 55p for the first 10,000 business miles
- Cars and goods vehicles: 25p thereafter
- Motorcycles: 24p per mile
This can provide a simpler alternative to calculating the business proportion of actual vehicle expenditure.
Mileage or actual vehicle costs?
If you are self-employed, you may have a choice between:
Simplified mileage
Claim the relevant flat rate for qualifying business miles.
Actual costs
Calculate the business proportion of expenses such as:
- Fuel
- Insurance
- Servicing
- Repairs
- Vehicle finance costs where relevant
- Capital allowances where appropriate
The better method depends on your circumstances.
A vehicle with unusually high running costs might produce a different result from a fuel-efficient vehicle covering substantial mileage.
Be careful once you choose simplified mileage
HMRC states that once you use the simplified mileage rates for a vehicle, you generally need to continue using that method for that vehicle while it remains in the business.
You also cannot generally use simplified mileage for a vehicle where you have already claimed certain actual vehicle costs or capital allowances.
It is therefore worth considering the method before making the first claim.
What about limited company directors?
A director using their personally owned car for genuine company business can potentially be reimbursed using the approved mileage rates.
For 2026/27, that means up to:
55p per mile for the first 10,000 qualifying business miles
and:
25p thereafter.
Where the company pays less than the approved rate, the director may potentially have Mileage Allowance Relief available for the difference.
The company should keep proper mileage records and distinguish genuine business journeys from ordinary commuting.
Why mileage claims matter for directors
Owner-managed companies often make one of two mistakes.
Either:
Nothing is claimed
even though the director regularly uses a personal vehicle for business.
Or:
All vehicle costs are paid by the company
without considering ownership and private use.
A properly documented mileage claim can often provide a cleaner way of reimbursing genuine business use of a personally owned vehicle.
Merranti’s accountancy services can help directors ensure mileage and other expenses are recorded correctly.
What is not business mileage?
Common journeys that generally do not qualify include:
- Home to permanent workplace
- Permanent workplace back home
- Private journeys
- School runs
- Personal shopping
- Holidays
- Detours made for private reasons
Adding a short work-related stop to an otherwise private journey does not necessarily transform the whole journey into business mileage.
The actual purpose of the travel matters.
Temporary workplaces can be different
Travel to a temporary workplace can potentially qualify as business travel in circumstances where ordinary commuting would not.
However, HMRC has detailed rules determining when a workplace is considered:
- Permanent
- Temporary
Someone attending the same location regularly for a prolonged period should not automatically assume every journey qualifies.
This is particularly relevant to:
- Contractors
- Consultants
- Construction workers
- Employees working across several sites
How do you claim Mileage Allowance Relief?
HMRC provides a service for employees claiming vehicle expenses.
If you complete a Self Assessment tax return, HMRC says the claim should instead be made through the tax return.
The process depends on your circumstances and the amount being claimed.
Keep the supporting mileage logs regardless of how the claim is made.
How far back can you claim?
Tax-relief claims can sometimes be made for earlier tax years where:
- You were eligible
- You have supporting information
- You remain within HMRC’s claim deadlines
However, remember that the car and van rate before 6 April 2026 was 45p for the first 10,000 miles, not the new 55p rate.
You should therefore apply the correct mileage rate for each tax year.
A practical example
Imagine you use your own car for work during 2026/27.
Business miles:
8,000
HMRC approved amount:
8,000 × 55p = £4,400
Your employer pays:
35p per mile
Total received:
£2,800
Difference:
£1,600
You may potentially claim Mileage Allowance Relief on:
£1,600
If all of that relief reduces income otherwise taxed at 20%, the tax reduction could broadly be:
£320
The claim does not mean HMRC pays you the missing £1,600.
It provides tax relief on that amount.
Frequently Asked Questions
What is the HMRC mileage rate for 2026/27?
For cars and vans, the approved rate is 55p per business mile for the first 10,000 miles and 25p thereafter.
Can I claim mileage if my employer pays me 30p per mile?
Potentially, yes. You may be able to claim Mileage Allowance Relief on the difference between what your employer pays and HMRC’s approved amount.
Can I claim mileage for driving to work?
Ordinary commuting between your home and permanent workplace does not normally qualify as business mileage.
Does the 55p rate include petrol?
The approved mileage rate is intended as a simplified rate for using your own vehicle and is not simply a fuel reimbursement.
Is the mileage rate the same for electric cars?
For an employee’s own electric or hybrid car, the statutory mileage rate falls within the same cars-and-vans rates.
Can self-employed people use the 55p rate?
Eligible self-employed people using simplified vehicle expenses can use 55p for the first 10,000 qualifying miles in 2026/27 and 25p thereafter.
Final thoughts
If you use your own vehicle for work, do not assume the amount your employer reimburses is the end of the calculation.
For 2026/27, the approved rate for cars and vans is now:
55p per mile for the first 10,000 qualifying business miles.
If your employer pays less, you may be entitled to tax relief on the difference.
The key is maintaining clear evidence of:
- Where you travelled
- Why you travelled
- How many business miles you covered
- How much your employer reimbursed
At Merranti Accounting, we help individuals, directors and self-employed people understand mileage claims, allowable expenses and the wider tax treatment of business travel.
Explore our accountancy services or contact Merranti Accounting if you need help understanding business mileage or vehicle expenses.
Written by Jason Fudge
Managing Director, Merranti Accounting
Jason works with individuals and business owners on financial planning, taxation and practical commercial decisions. His focus is on helping clients understand the financial implications of everyday business choices and make informed decisions before taking action.
Author image: Use Jason’s existing Merranti headshot.
