Car Mileage Allowance Calculator (UK)

This calculator was last updated on July 6th, 2026.

Example 1:

• Miles Driven = 5000
• Employer Payment (£) = 2400
• Car Mileage Allowance Benchmark (as per HMRC) is £2750
• £350 can be claimed as tax relief by the employee (falls short of HMRC benchmark)

Example 2:

• Miles Driven = 8000
• Employer Payment (£) = 4800
• Car Mileage Allowance Benchmark (as per HMRC) is £4400
• £400 is taxable (exceeds HMRC benchmark)

Example 3:

• Miles Driven = 12000
• Employer Payment (£) = 5800
• Car Mileage Allowance Benchmark (as per HMRC) is £6000
• £200 can be claimed as tax relief by the employee (falls short of HMRC benchmark)

Example 4:

• Miles Driven = 12000
• Employer Payment (£) = 7000
• Car Mileage Allowance Benchmark (as per HMRC) is £6750
• £250 is taxable (exceeds HMRC benchmark)

Variables

Miles Driven: The total number of miles driven by an employee using their own car for business or corporate purposes.

Employer Payment (£): The amount reimbursed by an employer to an employee for using their own car for business or corporate purposes.

Car Mileage Allowance Benchmark (as per HMRC)(£): This is the maximum tax-free mileage allowance that can be paid by an employer to an employee for using their own car for business or corporate purposes.

Taxable Value (£): If the employer payment exceeds the car mileage allowance benchmark, the employee needs to pay tax on the difference. Example, if the difference is £200 (taxable value) and the employee’s tax bracket is 20%, they need to pay £40 as tax.

Tax Relief (£): If the employer payment falls short of the car mileage allowance benchmark, the employee can claim tax relief on the difference. IMPORTANT: Note here, tax relief doesn’t mean HMRC pays cash directly to employees. Instead, employees can claim the shortfall value as a tax deduction, which will lower their taxable liability. Example: If the difference is £200 (tax relief) and the employee’s tax bracket is 20%, their tax liability gets reduced by £40.

How to Calculate Car Mileage Allowance (as per HMRC) and Taxable Value/Tax Relief?

Presently, as per HMRC, the tax-free car mileage allowance benchmark is 55p per mile for the first 10000 miles. After that, it’s 25p per mile. That means anything above 10000 miles as 25p per mile.

As explained earlier, if an employer pays anything over and above the tax-free car mileage allowance benchmark, the difference gets taxed in the hands of employees. On the other hand, if an employer pays less than the HMRC benchmark, employees can claim the difference as a tax deduction, which will reduce their tax liability.

Formula

Car mileage allowance benchmark (if miles driven is less than 10000) = miles driven x £0.55

Car mileage allowance benchmark (if miles driven is over 10000) = 10000 x £0.55 + [(miles driven - 10000) x £0.25]

Taxable value = Employer payment - Car mileage allowance benchmark

OR

Tax Relief = Car mileage allowance benchmark - Employer payment