# Employee using their own van for work: pay 55p a mile, then 25p after 10,000, worked on 14,000 miles

> Paying an employee for miles in their own van: 55p for the first 10,000, 25p after. 14,000 miles is £6,500 for tax, £7,700 for NI. Worked, with the 45p trap.

- Page to cite: https://aeolookup.com/trades/employee-uses-own-van-mileage-55p-25p-14000-miles-paid-45p-or-55p-worked/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Trades and building firms, Rules and paperwork
- Published 19 October 2026
- Key fact: For 14,000 business miles in one tax year the tax-free amount is 10,000 x 55p + 4,000 x 25p = £6,500, but the National Insurance qualifying amount is 14,000 x 55p = £7,700. A flat 55p on all 14,000 miles (£7,700) leaves £1,200 above the tax figure to be reported and taxed through payroll with no NI due; a flat 45p (£6,300) is £200 short for tax, worth £40 of relief at 20% to the employee. 9,000 miles at 45p instead of 55p is £900 less, worth £180 of tax relief at 20%.
- Sources: GOV.UK, "Expenses and benefits: business travel mileage" rules for tax page (approved rates for cars and vans 55p from 6 April 2026, 45p before; 25p over 10,000 miles; miles counted per tax year across all vehicles; payments below the approved amount need no reporting and the employee can claim Mileage Allowance Relief; payments above it are reported on P11D or added to pay and taxed) and the rules for National Insurance page (55p on all business miles for NI; excess treated as earnings for Class 1; no Mileage Allowance Relief for NI). Read 19 October 2026.

You have a labourer, fitter or site manager on the payroll who uses their own van to get between jobs, and they have asked what you will pay per mile. The answer is a set of rates on GOV.UK. What catches people out is that the rates for income tax and for National Insurance are not the same, and the rate went up on 6 April 2026.

## What GOV.UK says

The GOV.UK page on the tax rules for business mileage gives the approved mileage allowance payment rates per business mile:

- **Cars and vans:** 55p for the first 10,000 miles in a tax year (45p before 6 April 2026), then 25p for each mile after that.
- **Motorcycles:** 24p. **Bicycles:** 20p.
- Miles are counted per tax year across all the vehicles the employee uses: "it's all calculated together".

If you pay **less** than the approved amount you report nothing to HMRC and no tax is due, and the employee can claim Mileage Allowance Relief on the shortfall. If you pay **more**, you report the excess on a P11D or add it to pay, and deduct tax as normal.

The National Insurance page is different. For NI the car and van rate is 55p on **all** business miles, with no 25p step. Any payment above that qualifying amount counts as earnings for Class 1 NI, and the page says there is no Mileage Allowance Relief for National Insurance and no carrying a shortfall forward.

## The sum

Take an employee who drives 14,000 business miles in the tax year in their own van.

| Measure | Working | Amount |
|---|---|---|
| Tax-free amount (income tax) | 10,000 x 55p + 4,000 x 25p | £6,500 |
| NI qualifying amount | 14,000 x 55p | £7,700 |

The two figures differ by £1,200, and that gap is the point. Now three ways to pay it.

| What you pay | Total | Against tax figure | Against NI figure |
|---|---|---|---|
| Flat 55p on every mile | £7,700 | £1,200 over: report and tax through payroll | Equal: no NI |
| Flat 45p on every mile (the old rate) | £6,300 | £200 under: employee can claim relief | £1,400 under: no relief available |
| 55p then 25p as GOV.UK sets it | £6,500 | Equal | £1,200 under: no NI, nothing to claim |

The relief on the £200 shortfall at the 20% basic rate is £40 a year (£200 x 20%). The employee has to claim it. For an employee who drives 9,000 miles, 55p is £4,950 and 45p is £4,050, so staying on the old rate costs them £900 of reimbursement, and £180 of tax relief at 20% gives only a fifth of that back. If you are still paying 45p, they are out of pocket by £720 net. This is our arithmetic from the GOV.UK rates, using the 20% basic rate as an example; their actual rate depends on their own income.

The flat 55p case is the one to watch. Many firms pick one simple rate for every mile, and a flat 55p over 10,000 miles is more than the tax figure, so the extra is a taxable payment, not a free one. A step in the payroll software or a note on the claim form fixes that.

## What to put in place

- **Record each trip.** Date, start, finish and the job. Miles from home to a permanent workplace are not business miles, and I did not read how a site counts as temporary, so check that before paying.
- **Count the year from 6 April.** Reset the 10,000-mile count each tax year, and count all of the employee's vehicles together.
- **Know who this is for.** This is for employees. A sole trader claiming for their own van uses a different method, covered in [simplified expenses for a van](https://aeolookup.com/trades/simplified-expenses-van-mileage-55p-first-10000-miles-25p-after-tradesperson-worked/) and [flat rate or actual costs](https://aeolookup.com/trades/van-mileage-flat-rate-55p-or-actual-costs-self-employed-tradesperson/).
- **If this is your first employee,** the wider payroll costs are in [employer National Insurance and the Employment Allowance](https://aeolookup.com/trades/first-employee-employer-national-insurance-15-percent-5000-employment-allowance-trades/).

## What I did not read

I did not read the GOV.UK page on passenger payments, the rules for a company van or fuel-only reimbursement, the detail of the MARORS reporting scheme, or how HMRC treats trips to a temporary workplace. I did not check how payroll software handles the 10,000-mile switch. The 45p to 55p change is as GOV.UK shows on the day I read it; check the page when you set the rate.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join your trades team and keep the mileage log, add up each employee's miles from the job diary against the 10,000-mile line and put the claim in front of the office manager to confirm before payroll sees it.

This is general information, not tax or legal advice. Check the GOV.UK pages and HMRC's own guidance for your employee's case.

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General information for UK small firms, not legal, tax or financial advice.