Mileage Allowance for a Limited Company Driver: 2026/27 Guide

If you drive for Uber or Bolt through your own company, your mileage allowance limited company arrangement works differently from a sole trader's. Your company can pay you, tax-free, for business miles in your own car, up to HMRC's approved rate. That is 55p a mile for the first 10,000 miles and 25p a mile after that in 2026/27.

The rate is only half the story. You also need a proper mileage log, a clear rule on what counts as business travel, and a view on whether the company should own the car at all. This guide explains a director mileage claim step by step, compares a company car with your own car, and shows the numbers.

Key takeaways

• For 2026/27 your company can reimburse business miles in your own car at up to 55p a mile for the first 10,000 miles, then 25p, without income tax or National Insurance (NIC) on the payment.
• Those are approved mileage allowance payments (AMAP). They are not the same thing as the self-employed simplified expenses rate, even though the figures match this year.
• Home-to-work commuting is not business mileage. Keep a log with date, route, purpose and miles for every claim.
• A company-owned car with private use creates a benefit in kind (BIK) charge. For most petrol and diesel drivers, keeping the car personal and claiming mileage is simpler.
• Pay above the approved rate and the excess becomes taxable pay, so check the current figures on GOV.UK before you set up payments.

What is a mileage allowance for a limited company?

A mileage allowance limited company payment is money your company pays you for using your own car on business journeys. If it stays within HMRC's approved mileage allowance payment (AMAP) rates, you pay no income tax or NIC on it, and the company deducts it as a cost.

The rules sit in HMRC's employer guidance, because a director is normally an employee of their own company. According to HMRC's guidance on rules for tax on mileage payments, employers can pay up to the approved amount without reporting it to HMRC.

What are the AMAP rates for 2026/27?

For 2026/27, GOV.UK gives the approved rate for cars and vans as 55p a mile for the first 10,000 business miles and 25p a mile after that. It was 45p before 6 April 2026. Motorcycles are 24p a mile and bicycles are 20p a mile.

According to HMRC's guidance on mileage payment rules for tax, the 10,000-mile threshold is counted across the tax year, which runs from 6 April to 5 April. The 55p rate applied from 6 April 2026, so it covers the whole of 2026/27.

There is also a passenger payment. According to HMRC's guidance on passenger payments, you can pay up to 5p a mile tax-free when the driver carries another employee on a business journey. It applies to colleagues, not to paying Uber or Bolt passengers.

How is this different from the sole trader simplified rate?

AMAP is what a company can pay an individual tax-free for using their car. Simplified expenses is a flat-rate deduction a sole trader takes on their own Self Assessment return. They are separate schemes that happen to use the same headline figures in 2026/27, so never treat one as proof of the other.

According to HMRC's guidance on simplified expenses for vehicles, the 2026/27 flat rates for cars and goods vehicles are 55p and 25p, and 24p for motorcycles. HMRC's simplified expenses guidance is for sole traders and partnerships, and limited companies cannot use it. The two rates could diverge in a future year.

For a wider look at the sole trader method, read our guide to allowable expenses for Uber drivers. If you are still deciding on a structure, the sole trader versus limited company comparison sets out the wider trade-offs.

Can a director claim mileage from their own company?

Yes. A director can claim mileage from their own company when they use a personal car for business journeys. The company reimburses the miles at or below the AMAP rates, you keep the payment tax-free, and the company records a deductible expense. You need a log to support it.

A director mileage claim is treated like any employee's. The company is a separate legal person, so the car is yours and the payment is a business cost of the company. That is why a clean, dated log matters more here than it does for a sole trader.

Which journeys count as business mileage?

Business mileage is travel you make for the company's work, such as driving to a customer, a supplier, a garage or an airport pick-up you are paid for. Travel between home and a permanent place of work is ordinary commuting and does not qualify.

For Uber and Bolt work the picture has its own wrinkles. You usually work from home or from your car, so the pickup and drop-off journeys are the business travel. Driving from your front door to your first waiting point can need thought. HMRC's travel guidance for the self-employed says home-to-work travel is not claimable, and the same principle applies to a company.

• Driving passengers, including the dead miles between fares while you are on the app
• Trips to buy fuel or charge the car during a working session
• Visits to your accountant, the licensing authority or a garage for business reasons
• Trips to collect supplies or documents for the company

Not every case is clear-cut. If you are unsure whether a journey counts, ask before you claim it. The mileage calculator is a quick way to see how your total builds up across the year.

How do I claim mileage from my limited company step by step?

Log each business journey, add up the miles for the period, multiply them by the approved rate, and have the company pay you that amount. Then record the payment in the accounts as a business expense. Keep the log and the calculation together for at least the period HMRC can review.

1. Record every business journey with the date, start point, destination, purpose and miles, ideally at the time you drive it.
2. Total the miles for the tax year to date, so you know how many fall in the 10,000-mile band and how many after.
3. Multiply the first 10,000 miles by 55p and any further miles by 25p for 2026/27, keeping to the approved amount.
4. Raise a simple expense claim from you to the company showing the total and the period it covers.
5. Have the company pay you from its bank account, or record the amount in your director's loan account if it is owed to you.
6. File the log, the claim and the bank record together, so the payment can be traced if HMRC asks.

Our guide to mileage logs and bookkeeping records shows what a good record looks like. A director's loan account is a running balance of money owed between you and the company, and your accountant will keep it in step with the year-end accounts.

What happens if the company pays more than the approved rate?

If the company pays more than the approved amount, the excess counts as taxable earnings. Income tax applies to the excess, and NIC can apply too. The employer normally reports it through payroll or on a P11D, HMRC's annual form for benefits and expenses.

GOV.UK explains the tax side in its rules for mileage tax and keeps a separate NIC scheme. The NIC scheme has no mileage allowance relief and no carry-forward, so payments are tested period by period.

What if the company pays less than the approved rate?

If your company pays less than the approved amount, you can usually claim mileage allowance relief (MAR) on the difference, using your own Self Assessment return. HMRC's guidance describes this, and the unused balance is the gap between what you were paid and the approved amount.

That is why directors sometimes underpay themselves without meaning to. It is worth checking each year that the company is paying the full approved amount, especially when the rate changes, as it did on 6 April 2026.

Should my limited company own my car, or should I keep it personal?

For most petrol and diesel drivers, keeping the car personal and claiming mileage is simpler and cheaper in tax terms. A company car available for private use creates a benefit in kind charge, and running-cost rules add paperwork. Electric cars can change the answer, because their BIK rate is low.

Company vehicles come with a different set of rules. Capital allowances, VAT on the purchase and the disposal all need thought, and a private hire licence and insurance must match who owns the car. Our limited company service covers the vehicle question alongside formation and accounts.

What is a benefit in kind on a company car?

A benefit in kind (BIK) is a taxable perk. When a company provides a car that you can also use privately, HMRC treats the private use as extra income. The taxable value is the car's list price multiplied by a percentage set by its CO2 emissions.

According to HMRC's guidance on the appropriate percentage for company cars, the formula is list price multiplied by the appropriate percentage. Its example is a zero-emission car with a £30,000 list price, giving a taxable benefit of £1,200 in 2026/27.

The company reports the benefit on a P11D and pays Class 1A NIC on it. According to HMRC's guidance on what to report and pay, it applies to cars used privately and to fuel for private journeys that the employee does not repay. Check the current Class 1A rate on GOV.UK.

How does benefit in kind work for electric company cars?

Electric cars have the lowest BIK percentage. GOV.UK gives the zero-emission appropriate percentage as 4% for 2026/27, and confirms it rises by 2 percentage points in each of 2028/29 and 2029/30, reaching 9%. Because the percentage is low, the taxable benefit is small.

According to HMRC's guidance on company car tax percentages, the top band for high-emission cars is far higher, at up to 37%. The gap is why electric cars can make sense inside a company when petrol and diesel cars often do not.

The 2027/28 zero-emission percentage is set out in the same GOV.UK policy series, so check it there before you plan. Also confirm your exact CO2 band on GOV.UK, because plug-in hybrids follow different rules from pure electric cars.

What are advisory fuel rates and when do they apply?

Advisory fuel rates (AFR) are HMRC's per-mile fuel-only rates. They apply when a company reimburses fuel for business trips in a company car, or when an employee repays fuel used for private trips. At or above the rate, there is no taxable fuel benefit charge.

They are not the mileage allowance for your own car. According to HMRC's advisory fuel rates, the rates in force from 1 September 2026 are below, and HMRC updates them periodically.

Hybrid cars follow the petrol or diesel rates. Because AFR rates change, always check the current table on GOV.UK before paying or repaying fuel.

Illustrative example: mileage or company car?

This is an illustrative example with invented numbers. Imran runs his own limited company, drives his own car and covers 14,000 business miles in 2026/27. He is not a real person. We assume no other reimbursements and no VAT complications.

• First 10,000 miles at 55p: £5,500
• Remaining 4,000 miles at 25p: £1,000
• Total the company can pay tax-free: £6,500

The company pays Imran £6,500. He pays no income tax or NIC on it, and the company's profit is reduced by £6,500. If he had instead traded as a sole trader on simplified expenses, the same miles would produce the same £6,500 deduction, but as a reduction to his own taxable profit rather than a payment.

Now suppose the company bought an electric car with a £40,000 list price and Imran used it privately as well. The 2026/27 benefit is £40,000 x 4% = £1,600. If his marginal income tax rate were 20%, that is £320 of income tax, plus Class 1A NIC for the company. A petrol car in the highest band on the same price would give £14,800 of benefit before any tax.

The numbers show why the answer depends on the car. Imran also loses the simplicity of a single mileage claim, and gains a P11D to file. A quick comparison with real figures is worth doing before any purchase.

What are the most common mistakes and what penalties can they trigger?

The usual mistakes are claiming commuting, paying the wrong rate, keeping no log and buying a car through the company without checking the BIK. Each can lead to extra tax, interest and penalties. HMRC sets penalty percentages by whether an error is careless or deliberate.

• Claiming home-to-work commuting: the payment is treated as taxable pay, with tax and NIC due, and a careless error can carry a penalty.
• Paying above the approved rate: the excess is taxable earnings, with PAYE, NIC and possible late-payment interest.
• Keeping no mileage log: the payment cannot be supported, so HMRC can disallow the company's deduction and treat the money as pay.
• Using a sole trader flat rate inside a company: simplified expenses are not open to limited companies, so the claim basis is wrong.
• Ignoring private use of a company car: unreported BIK means unpaid income tax and Class 1A NIC, with interest and possible penalties.
• Not updating for the April 2026 rate change: this can mean under- or over-payment for part of the year.

If HMRC opens an enquiry into mileage claims, it is sensible to have a qualified accountant represent you. Our HMRC support service exists for exactly that situation.

Key terms

• AMAP: approved mileage allowance payments, the tax-free per-mile rates HMRC sets for using your own vehicle.
• BIK: benefit in kind, a taxable perk such as private use of a company car.
• P11D: HMRC's annual return of benefits and expenses provided to directors and employees.
• Class 1A NIC: employer-only National Insurance on most benefits in kind.
• AFR: advisory fuel rates, fuel-only per-mile rates for company cars.
• MAR: mileage allowance relief, the way an employee claims the gap between the approved amount and what they were paid.
• List price: the car's published price used to calculate the benefit.

How Uber Driver Accountant helps

We work only with drivers, and we charge fixed fees from £20 a month, so you know the cost in advance. We are independent of Uber and Bolt and are not endorsed by either.

For limited company drivers we handle the mileage payment set-up, the year-end accounts and the car decision together. See our limited company service for what is included, or our payroll service if you pay yourself a salary. Fees are on our pricing page.

If you also deal with VAT on your income, our note on VAT for Uber drivers explains when registration applies.

Conclusion

A mileage allowance limited company payment is one of the simplest tax-free ways to take money out of your company, provided the log is sound and the rate is right. For 2026/27 that means up to 55p a mile for the first 10,000 miles and 25p after.

Keep the car personal unless the numbers clearly favour a company vehicle, and check the current figures on GOV.UK each April. When you want a second pair of eyes on your own numbers, contact us and we will go through them with you.

Last reviewed 19 September 2026 by the Uber Driver Accountant tax team.

This article is general information and is not personal tax advice. Rates and rules change, and your circumstances matter. Speak to a qualified accountant before acting, and take professional representation if HMRC raises a dispute or penalty.