BusinessCalculator.co.uk

Mileage Allowance Relief Calculator

If your employer pays you less than HMRC's approved mileage rate, you can claim tax relief on the difference. This works out the shortfall and what it is worth.

Using 2026/27 UK tax rates

Your own vehicle, not a company car.

Total for the year. Enter 0 if you were not reimbursed.

Used only to estimate what the relief is worth.

Relief you can claim

£1,875.00

Approved amount
£4,125.00
Paid by your employer
£2,250.00
Estimated tax saving at 20%
£375.00

Based on 7,500 business miles at published 2026/27 rates.

How do I actually claim it?

If you complete a Self Assessment return, the claim goes in the employment expenses section. If you do not, you can claim tax relief on job expenses directly with HMRC. Claims can usually be backdated up to four tax years.

What this means

Mileage Allowance Relief is not a refund of the shortfall — it is tax relief on it. You get back the tax you would have paid on that amount, so a £1,875 shortfall is worth £375 to a 20% taxpayer and £750 to a 40% taxpayer.

Keep the two figures separate in your own mind: the deduction is the shortfall itself (the amount taken off your taxable income), while the cash tax saving is only a percentage of that — your marginal rate of Income Tax applied to the shortfall.

If your employer pays more than the approved rate, the excess is taxable pay instead and there is nothing to claim.

Quick answers

What is Mileage Allowance Relief in one sentence?
Tax relief on the gap between HMRC's approved mileage amount and what your employer actually paid you for business travel in your own vehicle.
Is the shortfall the same as the tax saving?
No. The shortfall (deduction) is the full pounds-per-mile gap; the tax saving is only that shortfall multiplied by your marginal tax rate.
Who can claim it?
Employees and directors using their own car, van, motorcycle or bicycle for business travel, where their employer pays below the approved rate.
Does it apply to company cars?
No. Mileage Allowance Relief only applies to a driver's own vehicle, not a company car, which is dealt with under advisory fuel rates instead.

Check earlier tax years too

Claims can normally cover the current tax year and the four before it, using the approved rates that applied in each year.

Keep the mileage log and any reimbursement statements — HMRC can ask you to evidence the claim.

You may also find useful

How we calculated it

The approved amount is your business miles at HMRC's published rates for your vehicle. The relief claimable (the deduction) is the approved amount minus what your employer actually paid you, and the estimated cash tax saving is that shortfall multiplied by the marginal tax rate you selected — a different, smaller number from the deduction itself.

Assumptions

  • All miles entered are qualifying business miles in the same tax year.
  • Relief is given at the marginal rate you choose; your real rate depends on your total income.
  • Passenger payments are excluded — you cannot claim relief on passenger payments you did not receive.
  • This is an estimate for planning, not a submitted claim.

How this calculator works

HMRC sets an approved amount for business travel in your own vehicle. Where your employer reimburses less than the approved amount, the difference can be claimed as an employment expense — either through a Self Assessment return or a claim for tax relief on job expenses.

Keep a mileage record showing the date, journey, purpose and miles for each business trip. HMRC can ask for it.

To see the approved amount on its own, use the business mileage calculator. If you employ staff and want to check your own payroll costs, the employer cost calculator may also help.

Worked examples

7,500 miles, paid 30p a mile, 20% taxpayer

The approved amount is 7,500 × 55p = £4,125. The employer paid 30p per mile, or £2,250. The shortfall — the deduction you can claim — is £1,875. At a 20% marginal rate, the cash tax saving is £1,875 × 20% = £375, not the full £1,875.

12,000 miles, paid 25p a mile, 40% taxpayer

The approved amount is 10,000 × 55p + 2,000 × 25p = £6,000. The employer paid 12,000 × 25p = £3,000, so the deduction is £3,000. At a 40% marginal rate the cash tax saving is £3,000 × 40% = £1,200.

9,000 miles, paid 55p a mile, 20% taxpayer

The approved amount is 9,000 × 55p = £4,950. The employer paid 9,000 × 50p = £4,500, so the deduction is £450 and the cash tax saving at 20% is £90.

Key terms explained

Mileage Allowance Relief (MAR)
Tax relief available when an employer pays less than HMRC's approved mileage amount for business travel in an employee's own vehicle.
Approved amount
The maximum amount HMRC allows to be paid or claimed tax-free for business mileage, using the AMAP rates — see the mileage calculator.
Marginal tax rate
The rate of Income Tax charged on your next pound of income. Relief on a mileage shortfall is worth this rate applied to the shortfall, not the full shortfall itself.

Common mistakes

  • Treating the deduction as the cash you get back

    The relief claimable and the tax saving are different figures. A £1,875 shortfall is the deduction; the cash saving is that amount multiplied by your tax rate, for example £375 at 20%, not £1,875.

  • Forgetting passenger payments do not count

    Relief is worked out on the driver's own approved mileage amount only. You cannot claim relief on passenger payments you were not paid, because they are not part of the approved amount for the driver.

  • Assuming any employer mileage payment automatically qualifies

    Only genuine business mileage in your own vehicle counts. Commuting mileage, or mileage already reimbursed under a separate car allowance arrangement, needs checking carefully before it goes into a claim.

  • Confusing this with a company-car benefit query

    If you drive a company car, this calculator and Mileage Allowance Relief do not apply — see the advisory fuel rate calculator instead, and note that neither tool calculates Benefit in Kind.

Common questions

What is Mileage Allowance Relief?

It is tax relief on the difference between HMRC's approved mileage amount and what your employer actually reimbursed you for business travel in your own vehicle.

Do I get the whole shortfall back?

No. You get tax relief on the shortfall, so it is worth the shortfall multiplied by your marginal Income Tax rate — the deduction and the cash saving are two different numbers.

What if my employer pays nothing?

Then the whole approved amount is available as relief, subject to the miles being qualifying business travel.

What if my employer pays more than the approved rate?

The excess is treated as taxable pay. There is no relief to claim in that situation.

Can I claim for previous years?

Claims can normally be made for the current tax year and the four previous tax years, using the approved rates that applied in each year.

Does this apply to a company car?

No. Company car fuel is handled through HMRC's advisory fuel rates, not approved mileage rates or Mileage Allowance Relief.

How is the tax saving different from the deduction?

The deduction is the full pounds-per-mile shortfall between the approved amount and what you were paid. The cash tax saving is only a percentage of that deduction — your marginal Income Tax rate — so it is always a smaller number than the deduction itself.

Do I need HMRC's permission before claiming?

No, but you do need to make the claim through Self Assessment or a job expenses claim, and keep mileage records in case HMRC asks to see them.

Sources

Last reviewed: 7 September 2026 · Statutory rates: 2026/27. This calculator is information only and is not tax, accounting or financial advice.