How to Calculate Mileage Allowance Relief in the UK: Step-by-Step Guide

Introduction

Running a car in the UK costs far more than fuel alone. Putting figures on each part of motoring makes it easier to budget, claim what you're owed and compare petrol, diesel and electric.

This guide explains how to calculate mileage Allowance Relief in the UK, step by step. Calculate HMRC approved mileage payments and the tax relief you can claim on business journeys. You'll see the formula, a fully worked example and practical tips for UK readers.

What this calculation covers

Calculate HMRC approved mileage payments and the tax relief you can claim on business journeys.

Accurate motoring numbers help you budget journeys, claim mileage relief from HMRC and decide whether an electric car makes financial sense for you.

The method and formula

HMRC rates are 45p a mile for the first 10,000 business miles by car and 25p after, 24p for motorbikes and 20p for bicycles. If your employer pays less, you can claim tax relief on the gap.

Every figure on our mileage Allowance Relief Calculator follows this method, so you can check the working yourself.

Worked example

Here's a typical example using these figures:

Running them through the method gives:

The headline figure is tax relief you can claim: £400.00. Change any input and the result will move with it.

How to use the calculator

1. Enter or choose business miles per year.
2. Enter or choose vehicle.
3. Enter or choose employer pays per mile (p).
4. Enter or choose your tax band.
5. Read your results. The main figure is shown at the top, with a breakdown underneath.
6. Try different values to compare scenarios side by side.

Tips for UK readers

• UK MPG uses imperial gallons (4.546 litres), which differ from US gallons.
• HMRC's approved mileage rate is 45p per mile for the first 10,000 business miles.
• Home EV charging on an off-peak tariff is usually far cheaper than public rapid chargers.
• Depreciation is often the largest hidden cost of owning a newer car.

Frequently asked questions

What's the quickest way to work out mileage Allowance Relief?

Use our free mileage Allowance Relief Calculator. It applies this method automatically: HMRC rates are 45p a mile for the first 10,000 business miles by car and 25p after, 24p for motorbikes and 20p for bicycles. If your employer pays less, you can claim tax relief on the gap.

What MPG should I use?

Use your real-world figure from your car's trip computer if you can; official figures are often optimistic.

Can I claim for commuting miles?

No. Normal commuting to a permanent workplace doesn't count as business mileage.

How often do HMRC mileage rates change?

Rarely. The 45p rate has been unchanged for many years, but always check GOV.UK.

Summary

To work out mileage Allowance Relief, follow the method above: HMRC rates are 45p a mile for the first 10,000 business miles by car and 25p after, 24p for motorbikes and 20p for bicycles. For a quick, accurate answer with your own figures, use the calculator.

Next, read Mileage Allowance Relief: Common Mistakes, Tips and FAQs.