P11D vs mileage allowance: which is cheaper for your client?
When the company car wins, when the mileage claim wins, and the EV exception that flips both rules.
Two questions to answer for every client who needs a car for work:company car or personal car? and, if personal, employer reimbursement at AMAP rates or actual costs?
The mileage allowance route
The employee uses their own car. The employer reimburses 55p / 25p per business mile, tax-free. No P11D, no Class 1A NIC, no employer admin beyond the expense claim.
- 10,000 miles × 55p = £5,500 tax-free
- Next 5,000 miles × 25p = £1,250 tax-free
- Total reimbursement: £6,750 with no tax cost
The company car route — petrol/diesel
Take a £35,000 list price diesel with 140g CO2/km. Using the 2026/27 BIK table, the appropriate percentage is around 35% (37% cap less the diesel modifier where applicable). Cash equivalent is £12,250.
- Higher-rate employee tax cost: 40% × £12,250 = £4,900/year
- Employer Class 1A NIC: 15% × £12,250 = £1,838/year
Plus fuel benefit if the employer pays for private fuel. Almost always cheaper to use the personal car and claim AMAP.
The EV exception
Same £35,000 list price, electric:
- BIK %: 4% for 2026/27
- Cash equivalent: £35,000 × 4% = £1,400
- Higher-rate employee tax: £560/year
- Employer Class 1A: £210/year
Now the company car is dramatically cheaper than reimbursing personal mileage at 55p — and the company can recover the cost via capital allowances. For owner-managers, an EV through the company is one of the few unambiguously good ideas of the past two years.
The shortcut
Three questions: (1) does the client want an EV? if yes, company car. (2) if it's an ICE car under 10,000 business miles, almost always personal car + AMAP. (3) above 10,000 business miles in an ICE car, run the model — the answer depends on CO2 and list price.
Mileage vs P11D BIK
Open the calculator and apply this to a real client.
FAQs
- What are the AMAP rates for 2026/27?
- Cars and vans: 55p per mile for the first 10,000 business miles, then 25p. Motorcycles: 24p. Bicycles: 20p.
- Are EVs really that much cheaper as a benefit?
- Yes. The BIK rate for fully electric cars is 4% in 2026/27, rising 1 percentage point a year (then jumping to 7% in 2028/29 and 9% in 2029/30). For a £45,000 EV, that's a £1,800 cash equivalent — versus typically £8,000+ for an equivalent diesel.