If your employees use their own cars for work, you need to understand Approved Mileage Allowance Payments. Get it wrong and you could be underpaying staff — or creating an unexpected tax liability.

What are Approved Mileage Allowance Payments (AMAPs)?

When an employee uses their own vehicle for business travel, you can reimburse them tax-free up to HMRC's approved rates — known as Approved Mileage Allowance Payments (AMAPs). Paying within these rates means no tax, no National Insurance, and no need to report to HMRC on a P11D.

If you pay less than the approved rate, employees can claim the difference as Mileage Allowance Relief (MAR) through their self-assessment tax return.

If you pay more than the approved rate, the excess is taxable and must be reported on the employee's P11D.

HMRC mileage rates 2025

These rates have remained unchanged since 2011:

Vehicle type	First 10,000 miles	Above 10,000 miles
Car or van	45p per mile	25p per mile
Motorcycle	24p per mile	24p per mile
Bicycle	20p per mile	20p per mile

Source: HMRC. Rates correct as of April 2025.

Additionally, if the employee carries a passenger for business purposes, you can pay an extra 5p per mile per passenger tax-free.

The 10,000-mile threshold explained

The threshold applies per tax year (6 April to 5 April), per employee, and per vehicle type. It resets every year.

Example: An employee drives 12,000 business miles in their car during the 2024–25 tax year.

First 10,000 miles: 10,000 × 45p = £4,500
Remaining 2,000 miles: 2,000 × 25p = £500
Total tax-free reimbursement: £5,000

What counts as business mileage?

Business mileage is travel between different workplaces or to temporary work locations. It does not include:

Ordinary commuting (home to a permanent workplace)
Private travel
Travel to a temporary workplace if the employee is expected to be there for more than 24 months

The rules around temporary workplaces can be nuanced. If in doubt, HMRC's EIM32000 series provides detailed guidance.

What records must you keep?

To support mileage claims, HMRC expects you to keep records showing:

The date of each journey
The start and end location
The business purpose of the journey
The number of miles claimed
The total amount reimbursed

Records must be kept for at least 6 years. In an HMRC enquiry, poor records are one of the most common reasons businesses end up paying back tax and penalties.

Electric vehicles and mileage

For employees using their own electric vehicle for business travel, the same AMAP rates apply — 45p per mile for the first 10,000 miles. HMRC has not introduced a separate lower rate for electric vehicles, despite the lower fuel cost. This makes AMAPs particularly generous for EV drivers.

If your business owns the electric vehicle and the employee charges it at home, there is a separate Advisory Electricity Rate (AER) — currently 7p per mile — for reimbursing the electricity cost.

How to manage mileage claims efficiently

Manual mileage logs — spreadsheets, paper forms, or email submissions — are error-prone and time-consuming to audit. A good expense management app lets employees log journeys on their phone, calculates the reimbursement automatically at the correct HMRC rate, and keeps a digital audit trail.

Claimio handles mileage tracking alongside receipt scanning, so everything runs through a single approval and reimbursement workflow.

HMRC Mileage Allowance 2025 — Complete Employer Guide