Approved mileage allowance (UK employment, 2025–26)
For 2025–26 income tax, the approved mileage amount for an employee using their own car or van is generally 45p per business mile for the first 10,000 miles in the tax year and 25p per mile thereafter. Qualifying employer mileage payments up to the approved amount are normally tax-free; where payments are lower, mileage allowance relief may be available subject to the rules. Ordinary commuting is not automatically business travel.
Worked example
An employee drives 12,000 qualifying business miles in their own car in 2025–26. The approved amount is 10,000 × £0.45 plus 2,000 × £0.25, or £5,000. If the employer pays £4,400 and the conditions are met, the employee may claim relief for the £600 shortfall.
Common mistake
Applying the first 10,000-mile rate to every mile or treating ordinary commuting as automatically qualifying business travel.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |