Claiming AMAP Mileage vs a Company Car: Which Costs Less Tax in 2026/27?
Employees who drive for work face a fundamental choice: use their own car and claim AMAP (Approved Mileage Allowance Payments) at 45p per mile, or take a company car that creates a benefit-in-kind (BIK) charge. For conventional petrol cars, the BIK tax cost is often significant. But for electric vehicles, the 4% BIK rate in 2026/27 changes the calculation entirely. This guide compares both options with worked examples.
TL;DR -- 30-Second Summary
• AMAP rates: 45p/mile (first 10,000), 25p above -- completely tax-free within limits, no BIK
• Petrol company car: BIK = list price x CO2 % (~28% at 120g/km); employee pays income tax; employer pays Class 1A NI at 15%
• EV company car: just 4% BIK in 2026/27 -- very low tax for employee and employer
• Class 1A NI: zero under AMAP; 15% of BIK for company cars
• Best option: EV company car is usually most tax-efficient; petrol car BIK often worse than AMAP for higher-rate taxpayers
AMAP vs Company Car: Side-by-Side
Feature
AMAP (own car)
Company car
Car ownership cost
Employee bears full cost
Employer funds the car
Mileage reimbursement
45p/mile (first 10,000); 25p above -- tax-free
Advisory Fuel Rate only (9-19p petrol; 4-7p EV)
BIK charge (employee income tax)
None
Tax on P11D value x CO2 %; 4% for EVs
Employer Class 1A NI
Zero on AMAP payments
15% of BIK value per year
P11D filing
Not required for AMAP
Required (or payrolled from April 2026)
Fuel for private mileage
Employee's own expense
Can be employer-funded (creates additional BIK)
Best suited to
Low-to-medium mileage; older/cheaper personal cars
High mileage or EV; employer wants to fund transport
AMAP in Detail: Tax-Free Mileage for Personal Car Use
AMAP rates are set by HMRC and represent the maximum that employers can pay per business mile without the payment being treated as taxable income. At 45p per mile for the first 10,000 annual business miles and 25p above that, the rates are designed to cover the full running cost of a typical car including fuel, insurance, servicing, and depreciation.
From the employee's perspective, receiving AMAP payments at these rates involves no income tax, no NI, no BIK, and no P11D. For the employer, AMAP payments within the approved rates are deductible as a business expense and carry no Class 1A NI liability. It is administratively simple -- just a mileage log and reimbursement.
The weakness of AMAP for high-mileage employees is the rate drop to 25p above 10,000 miles. For an employee driving 30,000 business miles per year in their own car, the AMAP payment covers 10,000 x 45p + 20,000 x 25p = £4,500 + £5,000 = £9,500. If the actual running cost of the car is higher (for example, if it is a newer or larger vehicle), the employee effectively subsidises the business. AMAP rates have not been increased since 2012 despite fuel and car cost inflation.
Company Car BIK: Petrol vs Diesel vs EV in 2026/27
The BIK percentage for company cars is determined by the vehicle's CO2 emissions. Higher-emission cars have higher BIK percentages, making the tax charge larger for both employee and employer. Electric vehicles (zero CO2 emissions) have a special 4% BIK rate in 2026/27, which makes them highly tax-efficient.
Vehicle type
CO2 (g/km)
BIK % 2026/27
BIK on £35,000 car
Employee tax (40%)
Employer Class 1A (15%)
Electric (EV)
0
4%
£1,400
£560/yr
£210/yr
Petrol (efficient)
100
25%
£8,750
£3,500/yr
£1,313/yr
Petrol (average)
130
31%
£10,850
£4,340/yr
£1,628/yr
Diesel (higher CO2)
160
37%
£12,950
£5,180/yr
£1,943/yr
Note: BIK percentages are indicative based on 2026/27 tables. Diesel cars attract a 4% surcharge on top of their CO2 percentage unless meeting RDE2 standards.
AMAP vs EV Company Car: The Key Calculation
For most higher-rate taxpayers, an EV company car in 2026/27 is substantially more tax-efficient than using their own petrol car and claiming AMAP -- because the car cost is entirely borne by the employer while the personal tax on the BIK is very low.
Consider a 40% taxpayer doing 15,000 business miles per year. Under AMAP: 10,000 x 45p + 5,000 x 25p = £4,500 + £1,250 = £5,750 tax-free reimbursement. The employee owns the car and pays all ownership costs. Under an EV company car (£40,000 P11D, 4% BIK): BIK = £1,600; employee income tax = £640 per year; employer Class 1A = £240 per year. The employer funds a £40,000 car for an annual cost to the employee of just £640 in extra income tax.
The comparison is less clear for employees who already own a suitable car and for lower-mileage drivers, where the AMAP reimbursement more than covers running costs and there is no company car BIK to pay. The optimal choice depends on individual circumstances -- annual mileage, existing car ownership, marginal tax rate, and the specific vehicle offered.
Frequently Asked Questions
Frequently Asked Questions
What are the AMAP rates for 2026/27?
AMAP rates are 45p per mile for the first 10,000 business miles in a personal car and 25p per mile above 10,000 miles. Payments within these rates are completely tax-free and NI-free for the employee, with no BIK charge and no P11D reporting required.
How is a company car taxed as a benefit in kind in 2026/27?
Company car BIK = P11D list price x CO2 percentage. For a petrol car at ~120g/km CO2, that is approximately 28% in 2026/27. Example: £30,000 car x 28% = £8,400 BIK. Employee pays income tax at their marginal rate on £8,400; employer pays Class 1A NI at 15% = £1,260 per year.
What is the BIK rate for electric company cars in 2026/27?
Zero-emission EVs have a BIK percentage of just 4% in 2026/27. A £40,000 EV produces BIK of £1,600. A 40% taxpayer pays £640 income tax; the employer pays £240 Class 1A NI. The EV rate rises by 1pp per year but remains far below petrol/diesel rates.
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Is there a tax disadvantage to using your own car for business (AMAP)?
AMAP payments are tax-free and NI-free with no BIK. The employee bears all car ownership costs. For low mileage drivers in conventional cars, AMAP is usually more tax-efficient. For high-mileage drivers, the rate drops to 25p above 10,000 miles, which may not cover running costs. No employer Class 1A NI applies under AMAP.
Can an employee claim AMAP on top of a company car?
No. AMAP only applies when an employee uses their own private vehicle for business. Company car drivers cannot claim AMAP. They can claim Advisory Fuel Rate (AFR) reimbursement for fuel -- approximately 9-19p/mile for petrol, 4-7p/mile for EVs.
What is Mileage Allowance Relief (MAR) and who can claim it?
MAR is available to employees who receive a mileage payment below the AMAP rate. If the employer pays 30p/mile but AMAP is 45p, the employee claims relief on the 15p shortfall via Self Assessment or a P87 form. Employees paid exactly at AMAP cannot claim MAR.
How does employer Class 1A NI compare between AMAP and a company car?
AMAP reimbursements within approved rates are exempt from all NI -- no Class 1A for the employer. A company car creates employer Class 1A NI at 15% of the BIK value every year. Example: BIK of £8,400 = £1,260 Class 1A per year. For an EV with BIK of £1,600, it is only £240 per year.
Which is cheaper for a driver doing 20,000 business miles per year?
Under AMAP at 20,000 miles: 10,000 x 45p + 10,000 x 25p = £7,000 tax-free (employee bears car costs). Under a petrol company car (28% BIK on £30,000): employee income tax £1,680-£3,360/year plus employer Class 1A NI £1,260/year. For 40% taxpayer with high mileage, AMAP or EV company car are typically more tax-efficient than a conventional petrol company car.
Is an EV company car more tax-efficient than AMAP in 2026/27?
Yes, for most employees. An EV at 4% BIK on £40,000 = £1,600 BIK; 40% taxpayer pays only £640/year income tax; employer pays £240 Class 1A. The employer funds the entire car cost. Combined with salary sacrifice, an EV company car can achieve very low effective costs -- usually more efficient than AMAP where the employee owns the car.
What mileage records must employees keep for AMAP claims?
HMRC requires a mileage log for each business journey: date, start/end location, purpose, and miles driven. Records must be kept for at least five years after the relevant tax year. Without records, HMRC can disallow AMAP claims in an enquiry. A simple spreadsheet or mileage tracking app is sufficient.
Disclaimer: This comparison is for general information based on 2026/27 AMAP rates and company car BIK tables. Rates and percentages are subject to change. Consult a qualified tax adviser or accountant for advice specific to your situation.
