HMRC Mileage Rates Explained: Company Cars, Salary Sacrifice, and the Rates That Actually Apply to You

Mileage claims in the UK aren't one-size-fits-all. The rate you can claim depends on whether you're driving your own car or a company car — and if it's a company car, the rate varies by fuel type and engine size.

Get this wrong and you could face a tax bill you didn't expect, or miss out on money you're entitled to. This guide breaks down every scenario clearly, including the often-misunderstood rules around salary sacrifice vehicles and electric cars.

The Two Systems: AMAP vs AFR

HMRC operates two entirely separate mileage rate systems. Which one applies to you depends on one question: who provides the car?

1. Your Own Car → Approved Mileage Allowance Payments (AMAP)

If you use your personal vehicle for business travel — whether you own it outright, finance it, or lease it privately — HMRC's Approved Mileage Allowance Payments apply.

For the 2026/27 tax year, the AMAP rates are:

These rates are flat — they don't vary by engine size, fuel type, or age of vehicle. A 15-year-old diesel van and a brand-new electric car both attract the same 45p/25p rate when they're your personal vehicle.

The AMAP rate is designed to cover all vehicle running costs: fuel, insurance, servicing, depreciation, road tax, and wear and tear. You cannot claim individual vehicle expenses on top of AMAP.

These rates have not changed since 2011.

2. Company Car → Advisory Fuel Rates (AFR)

If your employer provides you with a company car and you use it for business journeys, a completely different set of rates applies. These are HMRC's Advisory Fuel Rates, and they vary by fuel type and engine capacity.

Unlike AMAP, AFR rates are reviewed and updated every quarter by HMRC. The rates from 1 March 2026 are:

Petrol

Diesel

LPG

Fully Electric Vehicles

The split between home and public charging for electric vehicles was introduced by HMRC in September 2025. Before that, a single flat rate applied regardless of where the car was charged. The split acknowledges that public charging infrastructure typically costs significantly more than domestic electricity.

Hybrid Vehicles

Hybrid cars (both plug-in and mild hybrid) are treated as petrol or diesel for AFR purposes. There is no separate hybrid rate. If your company car is a petrol-electric hybrid, you use the petrol AFR table based on your engine capacity. Diesel hybrids use the diesel table.

The Difference Is Significant

To illustrate how much these two systems diverge, consider a 5,000-mile business year:

• Personal car (AMAP): 5,000 × 45p = £2,250
• Company petrol car, 1.6L (AFR): 5,000 × 14p = £700
• Company electric car, home charging (AFR): 5,000 × 7p = £350

The gap between personal and company car rates is enormous — and it's intentional. AMAP covers all vehicle costs (including depreciation and insurance), while AFR covers fuel only, since the employer already bears the cost of providing and maintaining the vehicle.

Where Does Salary Sacrifice Fit?

This is one of the most commonly misunderstood areas of UK mileage claims.

If you acquire a car through a salary sacrifice scheme, the vehicle is classified as a company car for tax purposes. This is true even though you are effectively paying for it through your salary deductions.

The logic is straightforward: under a salary sacrifice arrangement, your employer enters into the lease agreement and provides you with the car as a benefit in kind. You pay a reduced salary in exchange for this benefit. HMRC treats this the same as any other company car arrangement.

This means:

• Your car appears on your P11D as a benefit in kind
• You pay Benefit-in-Kind (BiK) tax based on the car's P11D value and CO₂ emissions
• For business mileage reimbursement, Advisory Fuel Rates apply — not AMAP

So if you have a salary sacrifice electric vehicle and drive 5,000 business miles, your employer should reimburse you at the AFR electric rates (7p for home charging, 15p for public), not at the 45p AMAP rate.

Some employees mistakenly believe that because they are "paying for" the car through their salary, it should be treated as a personal vehicle. HMRC does not agree. If the benefit is reported on your P11D and you're paying BiK tax, it's a company car — and AFR applies.

Salary Sacrifice and Company Cars: Confirmed as the Same by HMRC

To be absolutely clear: HMRC treats salary sacrifice vehicles and employer-provided company cars identically for the purposes of mileage claims.

Both use Advisory Fuel Rates. Both are reported as benefits in kind. Both attract BiK tax. The only difference is the funding mechanism — and that doesn't change the tax treatment of business mileage.

This is confirmed by HMRC's guidance on Optional Remuneration Arrangements (OpRA), which covers salary sacrifice. Under OpRA rules, the taxable benefit is the greater of the BiK value or the amount of salary sacrificed. The mileage reimbursement treatment remains the same as for any company car.

For electric vehicles obtained through salary sacrifice, the current BiK rate is just 3% for 2025/26, rising to 4% in 2026/27. Combined with low AFR rates, this makes electric salary sacrifice cars extremely tax-efficient — but it does mean your per-mile business reimbursement will be modest compared to AMAP.

What Happens If You're Reimbursed at the Wrong Rate?

If an employer reimburses a company car driver at more than the Advisory Fuel Rate, the excess is treated as taxable income. It must be reported on the P11D and both employee and employer face tax and National Insurance liabilities.

If an employer reimburses at less than the appropriate rate, the employee can claim the shortfall as Mileage Allowance Relief (MAR) from HMRC — either through a Self Assessment return or via form P87.

HMRC's Employer Compliance teams actively check mileage reimbursement practices during reviews. According to PKF Smith Cooper, mileage claims are one of the key areas inspected, and HMRC recovers a significant number of penalties from employers who apply the wrong rates.

A Quick-Reference Decision Tree

1. Is it your own car? → Use AMAP (45p/25p)
2. Is it a company car? → Use AFR (varies by fuel/engine)
3. Is it a salary sacrifice car? → It's a company car → Use AFR
4. Is it a hybrid? → Use the petrol or diesel AFR table
5. Is it fully electric? → Use 7p (home) or 15p (public) AFR
6. Getting less than AMAP/AFR? → Claim the difference from HMRC

How Trippi Helps

Trippi applies the correct HMRC rates automatically based on your setup. Whether you're using a personal vehicle at AMAP rates or need AFR-compatible records for a company car, Trippi calculates the right figures from your calendar events (Google Calendar or Microsoft Calendar) — and generates reports ready for your employer, your accountant, or your Self Assessment return.

No manual rate lookups. No quarterly AFR table checks. Just accurate, compliant mileage records.

---

Trippi is a UK-built mileage tracker that connects to your Google or Microsoft calendar. It calculates HMRC-compliant mileage automatically — no GPS, no guesswork.

Sources: HMRC GOV.UK — Advisory Fuel Rates (March 2026), HMRC GOV.UK — Approved Mileage Allowance Payments, Electric Car Guide (HMRC EV mileage rates), Electrifying.com (salary sacrifice guidance), FleetNews (March 2026 AFR update), PKF Smith Cooper (HMRC compliance review practices), HaysMac (AFR guidance March 2026). All rates verified as of March 2026.