Mileage Allowance Relief: How to Claim the Difference with Form P87

Published 15th July 2026

Plenty of employers pay mileage at less than the HMRC approved rate. Some pay 25p, some pay 40p, and a fair few pay nothing at all. If that is you, the shortfall is not simply lost: you can claim tax relief on the gap between what you were paid and what the approved rate would have given you. It is called Mileage Allowance Relief, and it is one of the most commonly missed claims in the UK tax system.

Two things to be clear about before we start. It is tax relief, not a refund of the shortfall, so you get back your marginal rate on it rather than the whole amount. And you can go back four tax years, which for a lot of people is the largest part of the claim.

What the relief is actually worth

The approved amount for cars and vans is 55p a mile for the first 10,000 business miles in the tax year and 25p a mile after that. Work out the approved amount for your business miles, subtract what your employer actually paid you, and the difference is the amount you claim relief on.

Here is what the same calculation looks like across the range of employer rates people actually get, on 10,000 business miles in a year.

Which route to use

There are three ways in, and which one applies depends on the size of your total expenses claim for the year.

• Total expenses claim of £2,500 or less: claim online through your Personal Tax Account, or by post on form P87.
• More than £2,500: you have to register for Self Assessment and put it on a tax return.
• Already file a tax return: put it on the return, in the employment pages. Do not also submit a P87.

That £2,500 figure is the total of all your employment expenses for the year, not just mileage, so professional subscriptions and tools count towards it. Note the threshold applies per tax year, so a large backdated mileage claim spread over four years may sit under £2,500 in each individual year even though the total is far higher.

What you need before you start

• Your National Insurance number
• Your employer's PAYE reference, which is on your P60 or a payslip
• The total business miles for each tax year you are claiming
• The total mileage payments your employer made to you in each of those years
• Mileage records showing the date, the reason for the journey, and the start and end postcodes

The postcode requirement catches people out. A log that just says "client visit, 45 miles" is thinner than HMRC wants. If you are reconstructing older years, work from your calendar and your expense claims rather than memory, and note where the figures came from.

How far back you can go

Four years from the end of the tax year you are claiming for. Tax years end on 5 April, so the deadlines fall on 5 April four years later.

Use the 45p rate for the earlier years. The 55p rate applies from 2026/27 onwards, and applying it to an earlier year will produce a claim HMRC rejects, along with a question about the rest of your figures.

How the money arrives

For a year that has already ended, HMRC works out the relief and repays it, usually by bank transfer or cheque. For the current tax year, they normally adjust your tax code instead, so you see it as slightly less tax each month rather than a lump sum. Both are the same money, just delivered differently.

If your mileage is broadly the same every year, HMRC may leave the adjustment in your code going forward. That is convenient until the year your driving drops off, at which point you are underpaying tax without noticing. Tell them when your circumstances change.

You cannot Claim actual costs instead

A question that comes up constantly: my car costs far more than 55p a mile to run, can I claim what it really costs me? As an employee, no. The statutory mileage rates are the whole of the relief available for using your own vehicle for work, and there is no route to claiming actual fuel, insurance and depreciation instead. The self-employed do have that choice. Employees do not.

If your employer pays more than the approved rate

The excess is taxable. Anything above the approved amount counts as earnings, is reported on the P11D, and is taxed in the normal way. There is no claim to make, and if your employer has been generous you may find a small tax charge rather than a repayment.

This bites in the public sector, where some mileage schemes pay above the HMRC rate by design. The excess is still taxable even where the rate is nationally agreed.

National Insurance works differently

One quirk worth knowing. For National Insurance the approved amount for cars and vans is 55p for every business mile, with no drop to 25p after 10,000. So a high-mileage driver can be under the approved amount for NI while being over it for tax, and vice versa. There is also no National Insurance equivalent of Mileage Allowance Relief, so if your employer underpays, the NI side simply does not generate a claim.

Do not pay someone a percentage of your own refund

Claims agents advertise heavily around this relief, and they typically take a cut of whatever comes back, sometimes a third or more. The claim is free to make, the online route takes about twenty minutes once you have your mileage totals, and HMRC pays the money to you directly.

Be particularly careful about signing a deed of assignment, which some firms bury in their sign-up. That can direct all your future tax repayments to the agent, not just the one you asked them about. Read what you are signing.

Work out what your claim is worth first with our mileage claim calculator, then decide whether it is worth twenty minutes of your evening. For most regular drivers, it very much is.