What is the 45p per mile rule?

45p per mile rule

The "45p per mile rule" typically refers to the standard mileage rate used for mileage reimbursement in the UK.

45p per mile is the current UK tax-free approved mileage for the first 10,000 miles travelled in the financial year for employees using their car. It doesn’t matter if the employee uses more than one car in a year, all the mileage is calculated together.

Additionally, if an employee drives another employee in their car on a business trip, the company may pay the driver an additional 5p per mile tax free as a ‘passenger payment’.

Every additional mile above 10,000 miles a year is reimbursed at a lower rate of 25p per mile.

Mileage for motorcycles and bikes are reimbursed at different rates – a flat rate of 24p per mile for motorbikes and 20p per mile for bikes – for all mileage, even over 10,000 miles per year.

This allowance covers the variable and fixed costs of owning and operating the vehicle such as fuel, oil, tyres, maintenance, repairs, registration and either depreciation or lease payments.