Limited Company Director Mileage: AMAP Paid Tax-Free by Your Own Company
If you run your business through a limited company and use your personal car for company business, your company can pay you Approved Mileage Allowance Payments tax-free: 55p per mile for the first 10,000 business miles and 25p after (rates from 6 April 2026). At the flat 55p rate, 10,000 business miles is 10,000 x 0.55 = 5,500 pounds paid to you free of income tax and National Insurance, and the company deducts that payment against its profits for corporation tax. This is structurally different from a sole trader's mileage claim.
The key difference: the company pays you, you do not deduct
A sole trader deducts business mileage as an expense on their own Self Assessment return, reducing their own taxable trading profit. A limited company director is not the business - the company is a separate legal entity. So the mechanism is different: the company pays you a mileage allowance for using your own car on company business, and that payment is tax-free in your hands up to the AMAP rate.
Because you and the company are separate, the money genuinely moves: the company pays the AMAP amount into your personal account (or reimburses it through an expense claim), the same way it would pay any other allowable expense. Up to the AMAP rate the payment carries no income tax and no National Insurance for you, and the company treats it as a deductible business expense.
The AMAP rate and the two-sided tax benefit
The AMAP rate from 6 April 2026 is 55p per mile for the first 10,000 business miles in the tax year and 25p per mile after that, up from 45p (the rate held from 2011 to April 2026). The rate covers all running costs of the car - fuel, insurance, road tax, servicing, and wear - so you do not claim those separately when using AMAP.
The benefit is two-sided. For you as the director: the payment is tax-free up to the AMAP rate, so 10,000 miles at 55p gives you 5,500 pounds with no income tax and no NIC. For the company: the mileage payment is an allowable business expense, deductible against profits for corporation tax, so it reduces the company's corporation-tax bill. HMRC's treatment of AMAP for directors and employees is set out in the Employment Income Manual at gov.uk (EIM31205 and following).
Worked example: 10,000 miles, and beyond
A director drives 10,000 business miles in the tax year. The company pays 10,000 x 0.55 = 5,500 pounds, tax-free to the director and corporation-tax deductible for the company. If the director drove 14,000 business miles, the first 10,000 are at 55p (5,500 pounds) and the next 4,000 at 25p (4,000 x 0.25 = 1,000 pounds), for a total of 6,500 pounds paid tax-free.
If the company chose to pay more than the AMAP rate - say a flat 60p for all miles - the excess above AMAP is a taxable benefit for the director and must be reported. Paying at or below the AMAP rate keeps the whole payment tax-free, which is why the AMAP rate is the standard figure companies use.
How this differs from the sole trader route
A sole trader claims mileage as a deduction on their own tax return using the simplified expenses flat rate or actual expenses, and the deduction only reduces their taxable profit - there is no separate tax-free payment because there is no separate entity to make one. Our sole trader mileage claims guide covers that route.
As a director, the mileage is a real payment from the company to you, tax-free up to AMAP, and separately a deduction for the company. Do not confuse the two: a director should not be 'deducting mileage' on a personal return in the sole-trader sense. The company reimburses AMAP; the company takes the corporation-tax deduction. This distinction matters because filing it the wrong way can double-count or misstate the relief.
Records and process
Keep a mileage log for every company business trip: date, route, business purpose, and miles. Submit the mileage to the company as an expense claim (even a one-director company should document this), and the company pays the AMAP amount. Retain the log and expense records; as a company, keep records for at least six years from the end of the accounting period.
Business travel for a director follows the employee rules, including the temporary workplace and 24-month rules, so ordinary commuting to a permanent workplace is not claimable. An auto-tracking log makes the monthly expense claim a matter of confirming trips rather than reconstructing them from memory.
FAQ
Can my limited company pay me tax-free mileage?
Yes. If you use your own car for company business, the company can pay you AMAP: 55p per mile for the first 10,000 business miles and 25p after, tax-free to you and corporation-tax deductible for the company. Payments above the AMAP rate are a taxable benefit for you.
How much is 10,000 miles worth to a director?
At the 55p AMAP rate, 10,000 business miles is 10,000 x 0.55 = 5,500 pounds paid to you tax-free, with no income tax and no National Insurance, and the company deducts the 5,500 pounds against its profits for corporation tax.
Is director mileage the same as a sole trader claiming mileage?
No. A sole trader deducts mileage on their own tax return, reducing their own trading profit. A director is paid a mileage allowance by the company (a separate legal entity), tax-free up to AMAP, and the company separately deducts the payment for corporation tax. The mechanisms are structurally different and should not be mixed.
Where does HMRC set out the director AMAP rules?
HMRC's Employment Income Manual covers mileage allowance payments for directors and employees, starting at EIM31205 on gov.uk. The manual explains the AMAP rates, the tax-free treatment up to those rates, and how any excess is taxed.
Can I claim the car's fuel and servicing on top of AMAP?
No. The AMAP rate is designed to cover all the running costs of the car - fuel, insurance, road tax, servicing, and wear. When the company pays you AMAP for a car you own, you do not separately claim those costs. Actual-cost claiming applies to company-owned cars, which follow different rules (benefit-in-kind and advisory fuel rates).
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