The example in the calculator
You drive 20,000 business miles in your own car and your employer pays a flat 45p for every mile.
- Approved amount: 10,000 × 55p + 10,000 × 25p = £5,500 + £2,500 = £8,000.
- Paid by employer: 20,000 × 45p = £9,000.
- Taxable excess: £9,000 − £8,000 = £1,000.
- Income tax: about £200 at 20% (£400 at 40%). Your employer should report it on your P11D or through payroll.
The National Insurance twist
For National Insurance the 10,000-mile split does not apply. NI is only due on payments above 55p for all business miles. At 45p you are below that, so there is no extra NI to pay — only income tax on the £1,000.
Flat 45p at different mileages
| Business miles | Approved amount | Paid at 45p | Result | Tax at 20% |
|---|---|---|---|---|
| 10,000 | £5,500 | £4,500 | Relief £1,000 | £200 |
| 12,000 | £6,000 | £5,400 | Relief £600 | £120 |
| 15,000 | £6,750 | £6,750 | Exactly even | £0 |
| 18,000 | £7,500 | £8,100 | Taxable £600 | £120 |
| 20,000 | £8,000 | £9,000 | Taxable £1,000 | £200 |
| 25,000 | £9,250 | £11,250 | Taxable £2,000 | £400 |
At 15,000 miles a flat 45p exactly matches the approved amount. Below that you can claim relief; above it, part is taxable.
Why does the rate drop?
The 55p rate is meant to cover fixed costs like insurance, depreciation and servicing as well as fuel. Once you have done 10,000 miles, HMRC treats those fixed costs as covered, so only the running cost (25p) stays tax-free.
Count the miles across the tax year
- The 10,000 miles are counted per tax year (6 April to 5 April), across all your employments with the same employer group.
- Miles in different cars are added together.
- Passenger payments of 5p per passenger per mile are on top and stay tax-free.
Self-employed?
Simplified mileage for the self-employed uses the same 55p and 25p split, so the same 10,000-mile line applies to your business miles.
What does the calculator headline mean?
The headline shows the income tax on the taxable excess and tells you whether National Insurance is due too. In this example it is not, because 45p is below the 55p NI-free rate. Only the £200 of income tax applies. If your employer paid, say, 60p a mile, NI would be due on the 5p above 55p for every business mile.
If you are not sure how your employer reports mileage payments, check your P60, P11D or year-end payslip, or simply ask the payroll team.
FAQ
What is the mileage rate after 10,000 miles?
25p a mile for cars and vans, after 55p for the first 10,000 business miles in 2026/27.
Is a flat 45p a mile taxable over 10,000 miles?
Partly, once total payments exceed the approved amount. On 20,000 miles at 45p, £1,000 is taxable — about £200 at 20%.
Do I pay National Insurance on the excess?
Not at 45p. For NI the 55p rate applies to all business miles, so only payments above 55p a mile attract NI.
Sources: GOV.UK “Travel – mileage and fuel rates and allowances” (55p rate, updated 21 May 2026); ATT news 21 May 2026 (written statement HCWS62, backdated to 6 April 2026); GOV.UK “Advisory fuel rates” (rates from 1 September 2026, updated 21 August 2026); Ross Martin Tax Consultancy. Checked 5 November 2026.