How mileage reimbursement works
When you use your own car for work, many employers pay a fixed rate per mile (or per kilometre) instead of reimbursing actual fuel receipts. The rate is meant to cover all running costs: fuel, maintenance, tyres, insurance and depreciation. Self-employed people often use the same rates to deduct business car use from their taxable profit.
The calculation itself is simple:
total distance = distance per trip × number of trips (× 2 for round trips)
reimbursement = total distance × rate per mile or km
Example: you drive 18 miles each way to a client site, 20 times this quarter, at a rate of $0.70 per mile. Total distance = 18 × 2 × 20 = 720 miles. Reimbursement = 720 × $0.70 = $504.
Official rates in different countries
Rates are set by tax authorities and usually updated every year, so always check the current figure before submitting a claim.
- United States: the IRS publishes a standard mileage rate for business use each year; it was 70 cents per mile for 2025. Employers that reimburse at or below this rate can do so tax-free under an accountable plan. Commuting between home and your regular workplace is not business mileage.
- United Kingdom: HMRC’s approved mileage allowance payments are 45p per mile for the first 10,000 business miles in a tax year and 25p per mile after that, for cars and vans. If your employer pays less, you can claim tax relief on the difference.
- Netherlands: employers can pay a tax-free travel allowance of up to €0.25 per km in 2026 (it was €0.23 up to 2025), including commuting. Switch this site to Dutch for a dedicated kilometervergoeding calculator with the commuting formula.
- Other countries have similar per-km schemes; Germany, for instance, uses a fixed rate per km for business trips.
UK example with the 10,000-mile threshold
You drive 12,000 business miles in a tax year. The first 10,000 miles at 45p = £4,500, the remaining 2,000 at 25p = £500, so the approved amount is £5,000. Calculate the two parts separately with this calculator and add them up.
Keeping a mileage log
Tax authorities expect records. For each trip, note the date, start and end location, the business purpose and the distance. Apps and spreadsheets work fine; what matters is that the log is made at the time, not reconstructed months later. Odometer readings at the start and end of the year help to show the split between business and private use.
Is the rate enough to cover my costs?
That depends on your car. For a fuel-efficient car the official rate usually covers more than the fuel; for a large or old car it may not cover depreciation and repairs. The fuel cost calculator shows what the fuel alone costs per mile, and the fuel economy calculator helps you measure your real mpg.
Mileage records for tax purposes
Whether you claim from your employer or deduct business mileage on your tax return, the tax authority can ask for proof. A good log shows the date, start and end address, purpose of the trip and the distance for every business journey. Keep it up to date during the year rather than reconstructing it later; many apps track trips automatically using GPS.
Frequently asked questions
How do I calculate mileage reimbursement?
Multiply the number of business miles by the reimbursement rate. 450 miles at $0.70 per mile is $315.
Can I claim my commute?
In the US and UK, regular commuting between home and your permanent workplace is generally not business mileage. Trips to temporary workplaces, clients or between sites usually are. In the Netherlands, employers may reimburse commuting tax-free up to the per-km limit.
What does the mileage rate cover?
It is meant to cover all costs of using your vehicle: fuel, oil, maintenance, repairs, tyres, insurance, registration and depreciation. Parking and tolls are often reimbursed separately.
Should I use miles or kilometres?
Use whichever unit your employer or tax authority uses for the rate. The calculator supports both.
Does it matter if I drive an electric car?
The rate per mile is usually the same for electric and petrol cars, although some countries and employers apply special rates for electric vehicles. Check your local rules.
Last reviewed: 2026-10-06. Results are estimates for information only.