Aa Approved Mileage Rates ((top)) Jun 2026

To understand how the two-tier structure impacts overall tax-free reimbursements, the graph below shows the total payout curve as a function of annual business miles driven. The sharp drop in the slope illustrates the transition from the 45p bracket to the 25p bracket at the 10,000-mile mark.

If they drive :

To claim mileage expenses using the AA approved rates, you'll need to keep a record of your business miles. This can be done using a mileage log or a spreadsheet. Here's a step-by-step guide: aa approved mileage rates

The AA approved mileage rates are a set of rates that estimate the cost of driving a vehicle for business purposes. These rates take into account the fuel, maintenance, and other expenses associated with driving a vehicle. The rates are usually updated annually and are widely used by businesses, accountants, and HMRC (Her Majesty's Revenue and Customs) in the UK.

Why does the rate drop to 25p after 10,000 miles? Think of vehicle ownership as having a high fixed entry cost but a lower ongoing running cost. Within the first 10,000 miles, the higher 45p rate helps absorb heavy fixed overheads like insurance, road tax, and annualized depreciation. Once those fixed annual baseline expenses are "paid off" by your initial mileage claims, the remaining costs are predominantly variable (just fuel and incremental tire or engine wear), which is why the statutory rate drops to 25p. 📈 Visualizing a Standard Mileage Claim To understand how the two-tier structure impacts overall

From an administrative perspective, these rates are a dream.

Scheduled oil changes, brake pads, tire wear, and unexpected mechanical repairs. This can be done using a mileage log or a spreadsheet

Many drivers assume the 45p mileage rate is only meant to cover fuel. In reality, it is a comprehensive allowance calculated to absorb all fixed and variable costs associated with operating a private vehicle for work purposes. The rate is mathematically weighted to account for:

Here’s a clear, professional write-up explaining (commonly used in the UK, Ireland, and referenced in business expense policies).