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Claiming Mileage Through Your Limited Company (2026/27)
If you run your own limited company and drive your own car for work, you can pay yourself for those miles — tax-free, up to HMRC's approved rate — while the company gets the cost as a deduction. Here's exactly how it works, in plain English, with every rule linked to GOV.UK.
Short answer: your company pays you a Mileage Allowance Payment — your business miles × 55p (first 10,000 miles, then 25p). Up to that approved amount it's tax-free to you (no income tax or National Insurance) and an allowable cost for the company. If the company pays you less, you claim the difference back as Mileage Allowance Relief.
What it actually is
When you use your own car for your company's business, the company can reimburse you for those miles. HMRC calls that reimbursement a Mileage Allowance Payment (MAP). It isn't salary and it isn't a dividend — it's a straightforward reimbursement of a genuine business cost, and that's exactly why it's treated so kindly for tax.
As a director you're an officeholder of your company, so the same rules that apply to an employee using their own car apply to you. The company pays the MAP; you receive it; HMRC stays out of the way as long as you keep to the approved rate.
The numbers
The amount the company can pay you tax-free is the approved amount: your business miles multiplied by HMRC's approved rate.
| Vehicle | First 10,000 business miles | Over 10,000 miles |
|---|---|---|
| Car or van | 55p | 25p |
| Motorcycle | 24p | 24p |
A worked example. Say you drive 4,000 business miles in your own car over the year. The approved amount is 4,000 × 55p = £2,200. Your company can pay you that £2,200 with no income tax and no National Insurance, and it books the £2,200 as a business cost. (Once you pass 10,000 business miles, the rate on the excess drops to 25p.) The 55p figure is current for 2026/27 — it rose from 45p on 6 April 2026.
Why it's one of the cleaner ways to be paid back
A MAP for business travel is efficient from both sides of your company:
- Tax-free to you. Up to the approved amount, the payment carries no income tax and no National Insurance — it lands in your pocket whole, unlike salary or dividends.
- Deductible for the company. The mileage it pays you is an allowable business cost, so it reduces the company's taxable profit.
That's the appeal: a genuine cost you were going to incur anyway — running your car for work — turned into money out of the company that neither of you is taxed on, provided it's real business mileage and you keep to the rate.
If the company pays more — or less
The approved rate is the line to sit on, and HMRC handles both sides of it:
- Paid more than the approved rate? The excess is taxable. The company reports it on form P11D and it's taxed as a benefit.
- Paid less, or nothing? You haven't lost the relief — you can claim the shortfall yourself as Mileage Allowance Relief through your Self Assessment. So even if your company can't pay the mileage out in a given year, the allowance isn't wasted.
For most one-director companies the simplest approach is to pay the MAP at exactly the approved rate: tax-free, deductible, nothing to report.
The records to keep (including VAT)
The claim rests on a log of the journeys: the date, where you went (start and end — postcodes for an employee/director claim), the business reason, and the miles, with a running annual total so the rate steps down correctly after 10,000 miles. You don't keep fuel receipts for the MAP itself.
One VAT exception. If your company is VAT-registered and reclaims the VAT on the fuel element of your mileage, it must hold enough fuel (VAT) receipts to cover the VAT it reclaims (unless the fuel's bought on a company card) — see VAT Notice 700/64. So: a journey log for the mileage payment, plus fuel receipts if the company is also reclaiming the VAT.
Company or sole trader?
The per-mile rate is identical; the route differs. A sole trader claims the mileage as a flat-rate expense on their own Self Assessment. A limited company pays it to you as a tax-free Mileage Allowance Payment and deducts it. If you're not sure which describes you, the UK mileage allowance rules page walks through all three situations (employee, director, sole trader).
Common questions
How does a director claim mileage from their own company?
Your company pays you a Mileage Allowance Payment for the business miles you drive in your own car — the miles × the approved rate (55p for the first 10,000 in 2026/27, 25p after). Up to that approved amount it's tax-free to you, and it's an allowable cost for the company.
Is a Mileage Allowance Payment tax-free?
Up to the approved amount, yes — free of both income tax and National Insurance. Anything paid above the approved rate is taxable and reported on form P11D.
What if my company pays me less than the approved rate?
You can claim tax relief on the shortfall yourself — Mileage Allowance Relief — through your Self Assessment. The allowance isn't wasted just because the company didn't pay it in full.
Can my company deduct the mileage it pays me?
Yes — Mileage Allowance Payments for genuine business travel are an allowable business cost, so they reduce the company's taxable profit. Keep the journey log to support it.
Do I need fuel receipts if I claim through my company?
Not for the mileage payment itself (that's based on a journey log). But if the company is VAT-registered and reclaims the VAT on your fuel, it must keep fuel (VAT) receipts to cover the VAT reclaimed — VAT Notice 700/64.
Keep an audit-ready log
Whatever the company pays you rests on the journeys behind it. Work out a figure with the free UK mileage calculator, read the full mileage allowance rules, or see the human version in how I claim my own business mileage (I claim through my company too). Mileage Tracker keeps that log on your phone, pay-once.
This is general information, not tax or accountancy advice. The rules and rates can change and were correct at publication (26 June 2026) — confirm your own position with HMRC or your accountant. Sources are linked throughout.