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Paying temps for mileage in their own car: 55p for the first 10,000 miles, 25p after, and what happens if the agency pays less or more
Tax-free mileage payments are 55p a mile to 10,000 miles and 25p after. Worked for a temp doing 12,000 miles paid at 40p, 55p and 60p a mile.
An agency sends a temp to a site that is not on a bus route. The temp offers to use their own car and asks for a mileage rate. The consultant who agrees it writes "45p a mile" from habit, and payroll later asks whether that was right. This guide gives the approved amounts and shows what each choice of rate does to the payroll.
The rule on GOV.UK
I read the GOV.UK page on tax rules for business mileage today. For an employee using their own vehicle, the approved amount per business mile is:
- Cars and vans: 55p for the first 10,000 miles from 6 April 2026 (45p before that date), and 25p above 10,000.
- Motorcycles: 24p at both levels.
- Bicycles: 20p at both levels.
The 10,000-mile threshold applies in a tax year, and the page says it "does not matter if your employee uses more than one vehicle in a year."
Paying more than the approved amount: report the excess on form P11D, add it to the employee's pay and deduct tax as normal. Paying less: you do not need to report it or pay tax, and the employee can claim Mileage Allowance Relief on the unused balance.
One worker, 12,000 miles, three rates
| Rate paid | Agency pays | Approved amount | Difference | What happens |
|---|---|---|---|---|
| 40p flat | £4,800 | £6,000 | £1,200 under | worker may claim relief on £1,200 |
| 55p flat | £6,600 | £6,000 | £600 over | £600 goes through payroll as pay |
| 60p flat | £7,200 | £6,000 | £1,200 over | £1,200 goes through payroll as pay |
| 55p then 25p | £6,000 | £6,000 | none | tax-free in full |
Our arithmetic. 10,000 miles at 55p is £5,500 and 2,000 at 25p is £500, so £6,000. A flat 55p on all 12,000 miles is £6,600, which looks tidy but goes £600 over the approved amount from the 10,001st mile. The common error is a flat rate that ignores the 25p step.
AI staff and workflows for recruitment agencies. Starting with cv screening and shortlist.See what we would set upThe agency's checks
Before a rate goes into a temp's booking confirmation, run through these four points.
- Which tax year? The 55p figure is from 6 April 2026; miles before that date were at 45p.
- How many miles so far this year? The step is at 10,000 in the tax year, and the page says it does not matter how many vehicles were used.
- Is it business mileage? The page I read does not say which of a temp's journeys count, so settle that before paying anything tax-free.
- Is anything above the amount? Put the excess through payroll with the other pay.
For the other pay-side sums the same team handles, see the national minimum wage rise for temps, rolled-up holiday pay and the temp margin calculator.
I did not read the page's wording on which journeys qualify as business travel, passenger payments, or the optional reporting scheme in detail, so check the full GOV.UK pages before changing a rate.
Overlyft builds AI staff who join your agency's payroll team, total each worker's claimed miles by tax year, set them against the 55p and 25p steps and prepare a list of payments above the approved amount for you to check before the pay run.
This is general information, not tax advice. Check GOV.UK and take advice on your own payroll.
Where this comes from: GOV.UK, "Expenses and benefits: business travel mileage" (approved amounts: cars and vans 55p a mile for the first 10,000 miles from 6 April 2026, 45p before, and 25p above; motorcycles 24p; bicycles 20p; the threshold applies across more than one vehicle in a year; anything above the approved amount is added to pay and taxed as normal and reported on form P11D; paying less needs no report and the employee can claim Mileage Allowance Relief on the balance). Read 14 October 2026.
AEO Lookup editorial team
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