Mileage policy template for UK SMEs
A one-page policy aligned with HMRC, UK employment law and GDPR. Ready to adopt.
Why a written policy matters
UK SMEs without a written mileage policy face three risks: HMRC may treat reimbursements as taxable income, employees may dispute calculations and timing, and the company has no defensible audit trail in case of investigation.[^hmrc-amap] A one-page policy fixes all three for under an hour of work.
Template (one page)
**1. Scope**
This policy applies to all employees and directors of [Company Ltd] who use a personal vehicle for company business. It does not cover ordinary commuting (home–permanent workplace) or private use.
**2. Approved rates**
We pay the HMRC AMAP rates: 45p per mile for the first 10,000 business miles in a tax year and 25p per mile thereafter. Motorcycles: 24p. Bicycles: 20p. Passenger payments: 5p per mile per qualifying business passenger.
**3. Eligible journeys**
Included: visits to clients, suppliers, between work locations, to a temporary workplace (under the 24-month rule), and work-related training.
Excluded: home to permanent workplace; private trips; trips where you are reimbursed by a client separately.
**4. Submission and approval**
Mileage claims must be submitted within 30 days of the journey via the company's expense system. Each claim must include: date, origin, destination, business purpose, miles, vehicle. Claims are approved by the line manager and processed in the next monthly payroll cycle.
**5. Records**
The company retains mileage records for 6 years (HMRC requirement: 22 months for Income Tax, but VAT and corporation tax can require longer). Employees may request access to their records under UK GDPR.
**6. VAT and AFRs**
For VAT recovery on the fuel element of AMAPs, employees must retain fuel VAT receipts dated within the relevant quarter and submit them with a cumulative value sufficient to cover the VAT reclaimed.
**7. Excess payments**
If, in exceptional cases, the company pays above the AMAP rate, the excess is taxable and reportable on the P11D, and the employee is responsible for the additional tax via Self-Assessment if requested.
**8. Compliance and disciplinary**
Falsifying mileage claims is treated as gross misconduct under the disciplinary procedure and may result in dismissal and recovery of overpayments.
**9. Review**
This policy is reviewed annually by the Finance team or whenever HMRC updates AMAP or AFR rates.
How to deploy
1. Get sign-off from the directors and (if applicable) the company secretary. 2. Issue as a circular to all employees with a signed acknowledgement form. 3. Upload to the staff handbook or intranet. 4. Configure your expense tool (Quilometragem, Concur, etc.) with the AMAP rate and the 30-day submission window. 5. Diary an annual review for the first week of April (start of the new tax year).
A note on hybrid car allowance + AMAP
Many UK SMEs combine a flat car allowance (taxed as salary) with AMAPs on actual business mileage. This is allowed by HMRC: the car allowance is part of pay (subject to Income Tax and NIC), and AMAPs at 45p/25p are tax-free on top. Employees should still be eligible for MAR if the AMAP-equivalent of any flat "mileage allowance" comes in below HMRC's rates.
Bottom line
A one-page policy covers HMRC, employment law and GDPR. Combine it with a digital expense system and you remove the most common cause of payroll disputes and tax exposure in UK SMEs.