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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 reimburses you for business miles in your own car — your miles × HMRC's approved rate (55p for the first 10,000, then 25p). It's a legitimate business expense, so the company deducts the cost; and because it reimburses a cost rather than paying you a wage, it isn't taxed as your income. As the owner, you set what the company pays you, so you pay yourself the approved amount.
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 — which is why it isn't taxed as your income.
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 books that £2,200 as a business cost (deductible), and pays it to you without it being taxed as your income — it's reimbursing a cost, not paying a wage. (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 a clean way to be paid back
It's an ordinary business expense, and an efficient one. Three things are worth knowing:
- It's a real cost the company deducts. Reimbursing your business mileage is an allowable expense, so it reduces the company's taxable profit — like any other cost of doing business.
- You don't have to prove your actual costs. You take the flat 55p a mile rather than totting up fuel, servicing, insurance and wear. HMRC's rate is meant to cover all of that — and for most cars it's more than a mile really costs you to run.
- It isn't taxed as your income. Because it reimburses a cost rather than paying you a wage or a dividend, the approved amount reaches you without income tax or National Insurance.
It's reimbursement for a cost you already carry — running your own car for work — in the form HMRC sets out for it.
The approved rate is the line to sit on
Since you set what the company pays you, the usual approach is to pay yourself exactly the approved rate: deductible for the company, untaxed for you, nothing to report. Two edges are worth knowing:
- Pay yourself more than the approved rate and the excess becomes taxable — the company reports it on form P11D. So the approved rate is the natural ceiling.
- If the full amount isn't paid — a tight year, or you're claiming against an employer that isn't your own company — you can claim the shortfall yourself as Mileage Allowance Relief on your Self Assessment. For your own company, you'd normally pay it in full, so this rarely applies.
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), and the employee route (the P87) has its own guide.
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 isn't taxed as your income (it reimburses a cost, not a wage), and it's an allowable cost the company deducts.
Is a Mileage Allowance Payment tax-free?
It isn't taxed as your income — it reimburses a cost rather than paying a wage, so up to the approved amount there's no income tax or National Insurance. Above the approved rate, the excess is taxable (P11D).
What if my company pays me less than the approved rate?
Normally, as the owner, you'd just pay yourself the full approved amount. If the full amount isn't paid (a tight year, or you're claiming against someone else's company as an employee), you can claim the shortfall as Mileage Allowance Relief through Self Assessment.
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.