Company vehicles and business mileage
If you use your own car or van for business journeys, your employer can reimburse you using the approved mileage allowance rates without creating a tax charge, provided the payments do not exceed the approved amounts.
Sole traders can instead use HMRC’s simplified mileage expenses to calculate their allowable business deduction, if they meet the conditions for using this method.
The mileage allowance for cars and vans was increased by 10p per mile from 45p to 55p per mile for the first 10,000 business miles in the tax year from 6 April 2026. The Chancellor has confirmed that the increase will be made permanent. The rate for business mileage exceeding 10,000 will also increase from 25p to 35p per mile from 6 April 2027.
If your employer or your business provides you with a company car that you can use privately, including for commuting, there is generally tax to pay on the benefit. The charge is based on the car's list price and its benefit-in-kind percentage. This percentage depends on the vehicle's CO₂ emissions, fuel type and, for qualifying hybrid cars, electric range.
Company car benefit percentages have been set for 2030-31, increasing by one percentage point across all emissions bands compared with 2029-30. The highest percentage for petrol/diesel cars with high CO2 emissions is 37% for 2026-27. The zero-emission car rate is 4% for the current tax year.
