Mileage Tax Rebate UK: Reclaim Approved Mileage Allowance Relief

If you drive your own car for work and your employer pays less than HMRC's approved rates, you can claim Mileage Allowance Relief (MAR) on the difference. Most people don't claim it. Most are owed money.

This guide tells you the rates, who qualifies, how to claim it free direct from HMRC, and the typical refund a 10,000-business-mile-per-year driver can expect.

The rates - Approved Mileage Allowance Payments (AMAP)

HMRC publishes "approved" mileage rates that an employer can pay tax-free for business use of an employee's own vehicle. These are the AMAP rates:

Vehicle	First 10,000 business miles per year	Above 10,000 miles
Cars and vans	45p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile

These rates have been frozen for many years and are well below current fuel + wear-and-tear costs. The rates are intended to cover petrol, depreciation, insurance, road tax, MOT and servicing - not to be a profit centre.

How Mileage Allowance Relief works

If your employer pays you less than the AMAP rate, you can claim tax relief on the difference (your "shortfall") at your marginal rate of tax.

Worked example: Sarah drives 8,000 business miles per year in her own car. Her employer reimburses her 30p/mile.

Business miles:                          8,000 miles
Employer reimbursement:                  8,000 × 30p = £2,400
HMRC approved amount (AMAP):             8,000 × 45p = £3,600
Shortfall:                               £3,600 − £2,400 = £1,200
Sarah is a basic-rate taxpayer (20%):    £1,200 × 20% = £240 refund

Sarah claims £240 from HMRC for that tax year. She can backdate the claim up to four tax years, so first-time claimants often see £600-£1,000 in their account.

If Sarah were a higher-rate taxpayer (40%), her refund would be £1,200 × 40% = £480 per year. The relief is at your marginal rate.

Who qualifies

You qualify if all of these are true:

1. You use your own car, van, motorcycle or bicycle for work.
2. The journeys are business mileage - not your normal home-to-work commute.
3. Your employer reimburses you at less than the AMAP rate (or doesn't reimburse you at all).
4. You paid income tax in the year you're claiming for.

You do not qualify if:

• The car is a company car (different rules apply).
• You're using your own car for the commute to your normal place of work (private mileage, not deductible).
• Your employer reimburses you at 45p/mile or above (no shortfall, no claim).
• You're self-employed (you'd claim mileage as a business expense in Self Assessment instead, not as a tax-relief claim).

What counts as business mileage

Business mileage is travel between work locations or to a temporary workplace. Examples:

• Yes - Driving from your office to a client's site for a meeting.
• Yes - Driving from your home to a temporary workplace (under 24 months of expected duration).
• Yes - Driving between two of your employer's offices.
• Yes - Driving to a one-off training event in another city.
• No - Your daily commute from home to your normal office.
• No - Personal trips, even if in your work car.

The "temporary workplace" rule is important and often misunderstood. If you're sent to work at a client site for an expected period of less than 24 months, that's a temporary workplace and the journey from home counts as business mileage. If you're permanently relocated there, it's a normal commute.

How to claim - the free DIY route

You have two routes, both free.

Route 1 - Online (P87 via Personal Tax Account)

1. Sign in to your HMRC Personal Tax Account at gov.uk/personal-tax-account.
2. Click "Claim tax relief for your job expenses".
3. Select "Vehicles you use for work" and "Mileage allowance for using your own vehicle".
4. Enter the year(s) you're claiming for, your business mileage, and the rate your employer paid.
5. Submit.

HMRC reviews and either pays the refund into your bank account or adjusts your tax code so the relief is applied automatically going forward.

Route 2 - Form P87 (postal)

If your annual claim exceeds £2,500, you must file Self Assessment instead of P87. For lower amounts, P87 is fine.

The form: gov.uk/government/publications/income-tax-tax-relief-for-expenses-of-employment-p87.

Post to:

Pay As You Earn HM Revenue and Customs BX9 1AS

Records you need

You don't have to send records to HMRC with your claim, but you must be able to produce them if HMRC asks (typically within 6 years). Keep:

1. A mileage log - date, journey from/to, business purpose, mileage. A simple spreadsheet is fine; many people use an app (Mileage Tracker, MileIQ, Drive - none endorsed by us).
2. Your employer's reimbursement records - usually visible on your payslip or expenses portal.
3. Letter or email from your employer confirming your reimbursement rate, if not on the payslip.

A common mistake: claiming all your annual mileage as business when only part of it is. HMRC tends to challenge round-number claims (e.g. exactly 10,000 miles) without supporting records.

Backdating - claim up to 4 years

You can claim for the current tax year plus the previous four. In 2026/27, that means you can go back to 2022/23. After 5 April 2027, the 2022/23 window closes.

A 10,000-business-mile/year driver, employer reimbursing at 25p/mile, basic-rate taxpayer:

• Annual shortfall: 10,000 × (45p − 25p) = £2,000
• Annual refund: £2,000 × 20% = £400
• Five-year backdated claim: £2,000 refund

When a refund firm might add value

For straightforward mileage claims, claiming direct from HMRC is the right call - the form is simple, the rules are clear, and HMRC processes claims without fuss.

A refund firm might add value when:

• You have complex mixed-use vehicles (van that doubles as personal transport).
• You have multiple employers in the same tax year and your records are scattered.
• You have historical claims for long-since-departed employers where reimbursement records are hard to retrieve.
• HMRC has already disputed a previous claim and you need representation.

Otherwise, doing it yourself in 20 minutes saves the 20-35% commission a refund firm would take. For a £2,000 backdated claim, that's £400-£700 you keep.

Disclaimer

PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated tax advice. Mileage Allowance Relief rules can interact with company-car tax, salary-sacrifice schemes and Self Assessment positions in ways outside the scope of this guide. For complex situations, contact HMRC on 0300 200 3300 or use a CTA-qualified tax adviser.