NHS mileage rates 2026: 59p, the 4,500-mile threshold, and where tax comes in

NHS staff in England on Agenda for Change contracts are now paid 59p a mile for the first 4,500 business miles a year in their own car and 36p after that. The rates changed on 1 June 2026 and the threshold on 1 July 2026, under a new mechanism reviewed twice a year. 59p is more than HMRC’s approved rate of 55p, so for some staff part of the payment is taxable — and for others the NHS pays less than the approved amount and they can claim relief. This page gives the published rates and works out, mile by mile, which side of the line a claim falls on.

NHS mileage against HMRC’s approved amount, by annual mileage

The two schemes step down at different points — the NHS at 4,500 miles, HMRC at 10,000 — and that creates three bands. Up to 5,447 miles the NHS rate is ahead. Between 5,448 and 17,863 miles, the NHS’s drop to 36p puts it behind HMRC’s 55p. From 17,864 miles, HMRC’s own drop to 25p lets the NHS catch up again.

Why the comparison is with the whole year, not each mile

The test in the Act is annual. Section 229(3) makes a payment approved “Mileage allowance payments are approved if, or to the extent that, for a tax year, the total amount of all such payments made to the employee for the kind of vehicle in question does not exceed the approved amount for such payments applicable to that kind of vehicle”. So a 59p mile in April is not taxable on its own; what matters is the total paid for the year against the total approved amount. Where the employer pays less, s.231(2) gives the employee a relief of “the difference between—(a) the total amount of all mileage allowance payments, if any, made to the employee for the kind of vehicle in question, and (b) the approved amount for such payments applicable to that kind of vehicle”.

One mismatch to be aware of: from 2027 the NHS threshold counter resets on 1 April, while the tax year starts on 6 April. The table treats them as the same year, which is close but not exact.

The rates, as NHS Employers publishes them

For journeys from 1 June to 30 June 2026 the same pence rates applied with the old 3,500-mile threshold:

Two other lines worth comparing with HMRC’s rates: the NHS motorcycle rate of 30p is 6p above HMRC’s 24p, and the pedal cycle rate of 20p and passenger rate of 5p match HMRC’s 20p and 5p.

NHS Employers’ own announcement page describes the new rate as “From 1 June 2026, the standard rate will increase to 0.59p (<3,500), and the drop-down rate will increase to 0.36p (>3500 miles).” — the “0.59p” there means 59p, as the FAQ table shows. We quote both as published.

How the new mechanism works

The old system was built on data that stopped: “The previous Agenda for Change (AfC) mileage reimbursement system had been in place since 2012 (England) and was designed to calculate mileage rates using motoring cost guides published annually by the Automobile Association (AA), which detailed the cost of running a car for typical domestic use.” “In 2014, the AA stopped publishing the motoring cost guides.”

The replacement starts from HMRC’s rates and adds inflation: “This data has been applied to the approved mileage allowance payment rates (AMAP) to establish the baseline mileage reimbursement rates that will apply from 1 June 2026.” “Going forward, the mechanism will review changes in the ONS “operation of personal transport equipment” CPI component every six months to ensure rates remain aligned with changes in motoring costs.” The agreement was “were accepted in full in March 2026.”

Reviews

And the sensitivity rule: “If a review produces a change of more than a whole penny in value, mileage reimbursement rates will change on 1 July or 1 January respectively.” The next possible change is therefore 1 January 2027, based on September’s data. Nothing is backdated: “No, the new mileage reimbursement rates will apply prospectively to business journeys undertaken on or after 1 June 2026.”

Who it covers, and what counts as a business mile

• Scope: “These arrangements apply to all staff in England on AfC contracts covered by the NHS Terms and Conditions of Service (TCS) Handbook, and whose employer operates under Section 17: reimbursement of travel costs.”
• One scheme for everyone: “There is no distinction between staff who travel often on NHS business (regular users) and those who travel less often (standard users); instead, reimbursement is determined by the type of vehicle used and the number of miles travelled (mileage threshold). Reimbursement rates are not linked to the engine size of vehicles.”
• Commuting is deducted: “This means that normal, home to base commuting mileage is not reimbursed and is deducted from claims for reimbursement i.e. the system provides for only additional out of pocket expenses to be claimed.”
• Home as base: “However, where the line manager and employee agree that the employee’s normal work base is their home, for the purposes of mileage claims the employee will be reimbursed for all business miles travelled from their home to the work locations visited and back to home.”
• No cap: “Reimbursement will be made regardless of the number of miles claimed for. There is no cap on the number of miles claimed.”
• Local alternatives: “As Section 17 is a permissible section, employers may seek to negotiate a locally agreed alternative for mileage reimbursement, subject to agreement through local partnership arrangements.”

The commuting deduction mirrors the tax rule. Ordinary commuting is not business travel under s.338 ITEPA, which is set out on travel expenses and tax.

The grey fleet

NHS Employers’ own guidance points at the alternative to all of this: “Employers are encouraged to consider, in partnership, ways to reduce reliance on the “grey fleet” (where staff use their own vehicles for business purposes) and to explore opportunities such as employer owned pool cars and other local travel solutions.” That is a travel programme question as much as a pay one.

For payroll and finance teams

• Track each car user’s business miles against both thresholds: 4,500 (NHS) and 10,000 (HMRC).
• Staff below about 5,448 miles a year are paid more than the approved amount, and the excess is taxable.
• Staff between about 5,448 and 17,863 miles can claim mileage allowance relief from HMRC for the shortfall.
• Re-run the comparison after each review: a change on 1 January or 1 July moves both crossover points.

HMRC’s own rates and the relief rules are on HMRC mileage rates; the VAT an employer can reclaim on the fuel part is on VAT on mileage claims. How public bodies buy travel is on public sector travel management. This page reproduces NHS Employers’ published rates as read on 2026-09-27 and applies ITEPA 2003; it is not tax or pay advice.

Common questions