Car Allowance vs Mileage Calculator
Instantly compare a taxable monthly car allowance against HMRC approved mileage allowance, based on your business miles, employer mileage rate, and tax band. See which option leaves you better off.
Compare Your Car Options
Enter your business mileage, allowance, and tax details below to see an instant, itemised comparison of a taxable car allowance versus claiming HMRC approved mileage allowance.
Allowance vs Mileage Estimator
Fill in your details to see your estimated annual comparison
Miles driven for work, not including your commute
Employer’s per-mile rate paid on top of the allowance (often lower than the HMRC rate)
Used to estimate tax on the allowance and mileage tax relief
Estimated Annual Comparison
Breakdown based on your mileage, allowance, and tax rate
HMRC Approved Mileage Rates
These are the current HMRC Approved Mileage Allowance Payment (AMAP) rates. You can be paid up to these amounts tax-free, or claim relief on the shortfall if your employer pays less.
| Vehicle Type | First 10,000 Miles | Over 10,000 Miles | Passenger Supplement |
|---|---|---|---|
| Car or Van | 45p per mile | 25p per mile | +5p per mile |
| Motorcycle | 24p per mile | 24p per mile | N/A |
| Bicycle | 20p per mile | 20p per mile | N/A |
Car Allowance vs Mileage FAQ
Everything you need to know about comparing a car allowance with mileage allowance, and how to make sure you’re not missing out on tax relief.
Yes. A car allowance is paid through payroll as part of your salary, so it is subject to Income Tax and National Insurance in the same way as your regular earnings. This is different from mileage payments, which can be paid tax-free up to HMRC’s approved rates.
For cars and vans, HMRC’s Approved Mileage Allowance Payment (AMAP) rate is 45 pence per mile for the first 10,000 business miles in a tax year, and 25 pence per mile after that. These rates are designed to cover fuel, wear and tear, insurance, and other running costs.
Yes. If your employer pays you less than the HMRC approved mileage rate for business miles, you can claim tax relief on the shortfall directly from HMRC, regardless of whether you also receive a car allowance. Relief is given at your marginal tax rate, not as a full pound-for-pound refund.
It depends on how many business miles you drive. High-mileage drivers often come out ahead with mileage allowance because it is paid tax-free at HMRC rates, while low-mileage drivers may prefer a fixed car allowance for its predictability, even though it is taxed.