MilesheetWhy 45p a mile has not moved since 2011
The rate was set when petrol was cheaper and cars were thirstier. It has outlasted three prime ministers and a great deal of inflation.
The approved mileage rate for cars and vans went to 45p a mile for the first 10,000 business miles from 6 April 2011, up from 40p. The 25p rate above 10,000 miles has been unchanged for considerably longer.
It has not moved since.
What the rate is meant to cover
It is not a fuel reimbursement. The approved rate is intended to cover the whole cost of running your own car for business: fuel, insurance, road tax, servicing, tyres, repairs and depreciation.
That is why it is so much higher than the Advisory Fuel Rates used for company cars, which cover fuel alone because the company already owns the asset.
What has happened since 2011
| 2011 | Now | Direction | |
|---|---|---|---|
| Approved rate, first 10,000 miles | 45p | 45p | Unchanged |
| Rate above 10,000 miles | 25p | 25p | Unchanged |
| Threshold | 10,000 mi | 10,000 mi | Unchanged |
| Insurance, servicing, parts | — | Substantially higher | Against the rate |
| New car prices, so depreciation | — | Substantially higher | Against the rate |
| Typical fuel economy | — | Better | For the rate |
| Electric running costs | Negligible uptake | Very low at home | For the rate |
Which is why the same rate is generous for one driver and thin for another, on identical mileage.
Why it feels less generous than it did
Two things pull in opposite directions.
Against the rate: everything except fuel has risen substantially since 2011 — insurance, parts, labour rates, and the purchase price of cars, which drives depreciation.
For the rate: cars have become considerably more efficient. A 2011 family car doing 40 mpg has a 2026 equivalent doing rather better, and an electric one doing better still on running cost per mile.
For a driver with a modern, efficient, cheaply-acquired car, 45p can still be comfortably ahead of what the mile costs. For someone running an older, thirstier or more expensive vehicle, it increasingly is not.
The 10,000-mile cliff
The part that ages least well is the threshold. It has been 10,000 miles for a very long time, and it is not indexed to anything.
A driver doing 20,000 business miles a year is claiming 45p on half of them and 25p on the rest, giving a blended rate of 35p. The rules assume high mileage means lower marginal cost, which is true for fuel and largely untrue for tyres, servicing and depreciation.
What you can do about it
If you are an employee paid less than the approved rate, you can claim tax relief on the difference. That is Mileage Allowance Relief and it is claimed through Self Assessment or a P87.
If you are self-employed and the flat rate genuinely does not cover your costs — a thirsty van, high mileage, expensive vehicle — actual costs may be worth more than simplified expenses. That decision is close to permanent per vehicle, so it is worth doing the arithmetic properly rather than defaulting.
Either way, the first requirement is knowing what your driving actually costs. Log fill-ups with the odometer and the figure stops being a guess.
Sources
- HMRC — Travel, mileage and fuel rates and allowances
- HMRC — Claim tax relief for your job expenses: vehicles you use for work
- HMRC — Expenses if you're self-employed: vehicles
- HMRC — Advisory fuel rates
General information for UK drivers, not tax advice. Check the current rate table before claiming.