55p Mileage Allowance for Limited Company Drivers: Directors' Back-Pay Top-Up FAQ

If your limited company has already reimbursed your business miles at 45p since 6 April 2026, it can usually pay you the missing 10p per mile now. The 55p mileage allowance for the first 10,000 business miles applies to the whole of the 2026/27 tax year, so a top-up that keeps the year's total within the approved amount is normally free of tax and National Insurance.

This FAQ is written for private hire drivers who trade through their own company and drive their own car. It covers the back-pay arithmetic, the paperwork a director should create, how the payment hits corporation tax, when P11D or PAYE comes into it, and what to do if the company paid less than the approved rate. For the wider rules on director mileage, read our limited company driver mileage guide.

Key takeaways

• The 55p rate for the first 10,000 business miles runs from 6 April 2026; 45p applied before that date and 25p still applies above 10,000 miles.
• A company that reimbursed you at 45p can pay the 10p difference for 2026/27 miles tax-free, provided total payments stay within the approved amount.
• Back the top-up with three documents: a board minute, the mileage log and a dated expense claim or schedule.
• The top-up is a business expense for the company, which normally reduces its corporation tax.
• If the company pays less than the approved rate, you can claim Mileage Allowance Relief instead, but on a small salary it may be worth little.

What is the 55p mileage allowance for a company director?

The 55p mileage allowance is the maximum your company can pay you, tax-free, for each of the first 10,000 business miles you drive in your own car in the 2026/27 tax year. Above 10,000 miles the approved rate is 25p. These payments are called approved mileage allowance payments, or AMAPs.

As a director you are an employee of your company for tax purposes, so the employee version of the 55p mileage allowance applies to you. The rate is not a fixed fee the company must pay. It is a ceiling: pay at or below it and there is no tax to deal with; pay above it and the excess is taxable.

Does the 55p rate apply to company directors as well as sole traders?

Yes. GOV.UK confirms 55p for both groups in 2026/27. The employer guidance on approved mileage rates for employees shows 55p from 6 April 2026, with 45p before that date, and the simplified expenses page for the self-employed shows the same 55p flat rate for the 2026/27 tax year.

According to HMRC's guidance on mileage payments to employees using their own vehicles, cars and vans attract 55p for the first 10,000 business miles from 6 April 2026 and 25p after that. The sole trader version sits on the simplified expenses vehicles page. The difference for you is the mechanism, not the rate.

A sole trader deducts the flat rate from profit on the tax return. Your company cannot do that, because simplified expenses cannot be used by limited companies. Instead, the company reimburses you as its employee and claims the payment as its own expense. If you are still weighing up the two structures, our sole trader versus limited company comparison sets out the trade-offs.

Can my company pay the 55p mileage allowance top-up tax-free for miles it already reimbursed at 45p?

Usually yes. The rate depends on the date each mile was driven, not the date it was paid. Every business mile driven from 6 April 2026 qualifies for 55p, up to the 10,000-mile point, so a further 10p per mile on those journeys keeps the total at the approved amount and creates no tax or National Insurance charge.

The test is annual, which is what makes a backdated 55p mileage allowance top-up work. HMRC compares the total mileage payments for the tax year with the approved amount, which is your business miles multiplied by the approved rates. Paying 45p in May and 10p in November is the same, for that test, as paying 55p in May.

Two limits apply. First, the top-up only covers 2026/27 miles. Journeys before 6 April 2026 belong to 2025/26, when the approved rate was 45p, so no top-up is due on them. Second, miles beyond 10,000 in the year were always worth 25p and nothing has changed there.

How do I work out the back-pay top-up step by step?

Start from the mileage log, not from the expense payments, when you calculate any 55p mileage allowance back pay. The log tells you how many business miles were driven in each period; the payments tell you what the company has already handed over. The top-up is simply the gap between the approved amount and what was paid.

1. Pull your mileage log for 6 April 2026 onwards and total the business miles month by month. Exclude any private journeys.
2. Mark the month in which your cumulative business miles pass 10,000. Miles up to that point are 55p miles; miles after it are 25p miles.
3. List every mileage payment the company has made for 2026/27 journeys, with the date paid and the rate used.
4. Work out the approved amount so far: 55p multiplied by the miles up to 10,000, plus 25p multiplied by any miles above 10,000.
5. Subtract the amount already paid. The answer is the top-up. For miles reimbursed at 45p and still under 10,000, it is 10p per mile.
6. Prepare a one-page schedule showing the months, miles, rate used, rate due and difference, and attach it to a dated expense claim.
7. Hold a short board meeting, minute the approval of the new rate and the top-up, then pay it or credit it to your director's loan account.
8. Change your claim template so all future claims use 55p up to 10,000 miles and 25p after that.

If you are close to the 10,000-mile point, the switch month needs careful splitting. Our 10,000-mile switch bookkeeping steps show how to split a single month between the two rates. To estimate the year's total before you start, try the mileage calculator.

What paperwork should support a director's mileage top-up?

Keep three things together: a board minute approving the 55p rate and the backdated payment, the mileage log for the journeys covered, and a dated expense claim with the top-up schedule. With all three in place, anyone reviewing the company's books can see what was paid, why, and for which miles.

In a one-person company, the board meeting that approves the 55p mileage allowance is you, at your kitchen table, writing it down. That still matters. A minute shows the payment was a decision of the company, not a director quietly taking money out. A good minute covers:

• the date of the meeting and the director or directors present;
• the decision to reimburse business mileage at 55p for the first 10,000 miles and 25p thereafter, effective from 6 April 2026;
• the decision to pay a top-up of 10p per mile for 2026/27 miles already reimbursed at 45p, with the total figure;
• a reference to the schedule and mileage log the figure is based on;
• how it will be paid: bank transfer or credit to the director's loan account.

The mileage log is the document that carries the most weight. For each business journey record the date, start and end points, the reason for the trip and the miles. HMRC's guidance on tax relief for vehicles you use for work asks for the reason plus start and end postcodes when an employee claims relief, which is a sensible standard to follow anyway. Our guide to HMRC mileage log records covers the format in detail.

How does the top-up affect my company's corporation tax?

The 55p mileage allowance top-up is a business expense of the company, just like the original 45p payments. It reduces the company's taxable profit for the accounting period in which the expense falls, so it normally reduces the corporation tax bill. On profits taxed at the 19% small profits rate, every £100 of top-up saves about £19.

GOV.UK's Corporation Tax rates page shows a 19% small profits rate for profits of £50,000 or less and a 25% main rate above £250,000, with marginal relief in between. Which rate applies depends on your company's profit and its accounting period, so check the current figures before relying on them.

Timing is the point many directors miss. Your company's accounting year may not match the tax year. If your company year ends on, say, 30 September 2026, miles from April to September 2026 belong to that period's accounts, even if the top-up is paid in November. Your accountant can include it as an amount owed at the year-end, so the deduction lands in the right year.

Does a 55p mileage allowance top-up go on a P11D or through PAYE?

Not if the total stays within the approved amount. GOV.UK lets employers pay mileage allowance payments up to the approved amount each year without reporting them to HMRC. Only an excess has to be either reported on a P11D or added to pay through PAYE, the payroll system, with tax deducted.

National Insurance has its own rules. HMRC's National Insurance rules for mileage payments work out the NIC-free amount by multiplying business miles in each earnings period by the rate per mile, 55p for cars from 6 April 2026. Any excess goes through payroll for Class 1 NIC in that period, and the guidance says the difference cannot be carried forward.

So if your company paid more than 55p, or kept paying 55p well past 10,000 miles, you may have a taxable excess to report. If you had previously put part of a mileage payment through payroll because you thought it exceeded the old rate, your accountant may be able to correct that. Our payroll service can handle the correction if it is needed.

What happens if my company paid less than 55p and will not top up?

You can claim Mileage Allowance Relief, often shortened to MAR, from HMRC on the shortfall. Relief is the approved amount for your business miles minus whatever the company paid. It reduces your taxable employment income, so it saves income tax only, not National Insurance, and its value depends on your own tax position.

GOV.UK's vehicles you use for work page says you work out relief by multiplying business miles by the approved rate and subtracting what your employer paid. It also says that if you complete a Self Assessment return, you must claim through the return. Most directors file one, so the claim normally goes on the employment pages. See our guide to the director's Self Assessment return.

Here is the catch for many drivers. A typical owner-driver takes a small salary and the rest as dividends. Relief is set against your employment income, and if your salary is already covered by your personal allowance there may be no tax for the relief to reduce. In that case, a company top-up is usually the more valuable route. Check the position with your accountant before choosing.

Company top-up or HMRC relief: which route suits a director?

For most private hire directors, having the company pay the full 55p mileage allowance is the better route. It puts cash in your hand without tax, and the company gets a corporation tax deduction. Mileage Allowance Relief only reduces income tax on salary, so it is mainly useful when the company genuinely cannot afford to pay.

Should the car be personally owned or company-owned?

The 55p mileage allowance back-pay question only arises if you own the car personally. AMAPs are for employees using their own vehicles. If your company owns or leases the car, the approved mileage rates do not apply, and a company car brings its own benefit in kind and fuel rules instead.

The decision table below is a starting checklist, not a verdict. The full comparison, including benefit in kind on electric cars, is in our article on HMRC mileage rates for limited company clients and our main mileage guide.

Illustrative example: a director's back-pay top-up

This illustrative example uses an invented driver and figures chosen for clarity. Marcus is the sole director of his own private hire company. He drives his personally owned car, pays himself a small salary within his personal allowance, and claims mileage from the company each month.

From 6 April to 30 September 2026, Marcus logged 7,400 business miles. The company reimbursed them at 45p, paying £3,330. When he heard about the backdated rate, he worked out the approved amount for those miles: 7,400 × 55p = £4,070. The top-up due was £4,070 minus £3,330, which is £740, or 10p for every mile.

In October he minuted the decision, attached the schedule and paid himself £740. From October he claimed the full 55p mileage allowance. He passed 10,000 business miles in late November, so 2,600 miles were paid at 55p (£1,430). Assume he then drives 6,200 more business miles by 5 April 2027 at 25p (£1,550).

Total payments equal the approved amount, so there is nothing to report and no tax or NIC on Marcus's mileage. The company deducts the £740 as an expense; if its profits are taxed at the 19% small profits rate, that saves about £140.60 of corporation tax. Had Marcus skipped the top-up and claimed Mileage Allowance Relief instead, his salary would already be covered by his personal allowance, so the relief would likely have been worth nothing.

Common mistakes and the penalty each can trigger

• Topping up miles driven before 6 April 2026. Those belong to 2025/26 at 45p, so the extra 10p is a taxable excess. If it is not reported, HMRC can charge interest and may charge a penalty for a careless inaccuracy.
• Paying 10p extra on miles above 10,000. Those miles were always 25p, so the top-up creates an excess that should go on a P11D or through payroll.
• Paying the top-up and also claiming Mileage Allowance Relief on the same miles. That overclaims relief, and a corrected return plus interest may follow.
• No board minute or schedule. The payment can look like undocumented drawings, which can lead to questions about the director's loan account or a reclassification as pay.
• Gaps in the mileage log. Without journey-level records, HMRC can disallow part of the mileage. Our guide to HMRC mileage enquiries explains what to do if a letter arrives.
• Booking the top-up in the wrong company year. That misstates profit for both periods and may mean amending a corporation tax return.

Key terms

• AMAP (approved mileage allowance payment): a payment from an employer to an employee for business miles in the employee's own vehicle, tax-free up to the approved rate.
• Approved amount: business miles in the tax year multiplied by the approved rates, 55p for the first 10,000 car miles and 25p after that in 2026/27.
• MAR (Mileage Allowance Relief): tax relief an employee can claim when the employer pays less than the approved amount.
• P11D: the form an employer uses to report taxable expenses and benefits for an employee, including any mileage excess not put through payroll.
• PAYE (Pay As You Earn): the payroll system used to deduct income tax and National Insurance from pay.
• Class 1 NIC: National Insurance contributions on employee earnings, paid through payroll.
• Director's loan account: the company's record of money it owes to, or is owed by, a director.

How UK Driver Accountants helps

We work only with drivers and are independent of any ride-hailing app. Our limited company accounts service covers the mileage top-up from start to finish: we check your log, split it at 6 April 2026 and 10,000 miles, draft the board minute and schedule, and post the expense to the correct year. We also set up a claim template so the right rate is used from now on.

Whether you need a one-off 55p mileage allowance clean-up or year-round support, our fees are fixed, starting from £20 a month, and you can see what is included on our pricing page. If HMRC has already asked about your mileage, we can deal with them on your behalf.

Conclusion

The backdated 55p mileage allowance is one of the few changes that puts money back in a director's pocket without a tax bill attached. Work from the log, cut it at 6 April 2026 and at 10,000 miles, minute the decision, and pay the gap. If you want us to run the numbers and prepare the paperwork, contact our team and we will take you through it.

Last reviewed 9 November 2026 by the UK Driver Accountants tax team.

This article is general information and is not personal tax advice. Figures are for the 2026/27 tax year; confirm current rates on the HMRC approved mileage rates table. Speak to a qualified accountant about your own circumstances. If HMRC is disputing your mileage or has charged a penalty, professional representation is recommended.