Mileage allowance FAQs

1. Why has the NHS Staff Council negotiated new arrangements for reimbursing business miles?  

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. As a result, the existing mechanism for calculating mileage reimbursement rates could no longer operate as intended. Since that point, any changes to the reimbursement rate have depended solely on significant fluctuations in fuel prices, as fuel remained the only cost element for which data continued to be available. 

In June 2024, the NHS Staff Council was given a mandate from the Department of Health and Social Care (DHSC) to renegotiate a new mechanism to calculate the reimbursement rates for NHS staff in England whose contract of employment directly links to Section 17 of the AfC NHS Terms and Conditions of Service Handbook (NHS TCS).  

2. How does the new mechanism work? 

The Office for National Statistics (ONS) publishes data on aspects of the cost of motoring under the “operation of personal transport equipment” component of the Consumer Prices Index (CPI) in aggregate. The NHS Staff Council has used this data as an inflationary measure for the costs associated with business motoring. 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 CPI “operation of personal transport equipment” provides an aggregated rate of inflation for:  

• fuels and lubricants 

• maintenance and repairs 

• spare parts and accessories 

3. What are the changes being made to the arrangements for reimbursing business miles?  

The below rates will apply to business journeys made on or after 1 June 2026: 

• From 1 July 2026, the mileage dropdown threshold – the point at which the reimbursement rate reduces - will increase from 3,500 miles to 4,500 miles. The increase in the mileage threshold allowance means that the higher rate will apply for a greater number (1000 more) miles each year. 

• The below rates will apply to business journeys made on or after 1 July 2026:  

• From 1 April 2027, the annual mileage threshold counter will reset at 4500 miles and will reset each 1 April thereafter.  

4. Who do the new mechanism arrangements apply to? 

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. 

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.   

Unless a decision has been made at a local level, these arrangements will not apply to staff within the remit of the Doctors' and Dentists' Review Body or very senior managers, except for those employed on the Terms and Conditions of Service for NHS Doctors and Dentists in Training (England) 2016. Resident doctors in England will be reimbursed in line with the arrangements set out in Section 17 of the NHS Terms and Conditions of Service Handbook. 

For other doctors and dentists, who are not employed on the 2016 resident doctor contract, mileage reimbursement continues be governed by their own terms and conditions and relevant medical and dental pay and conditions circular. 

Very senior managers are reimbursed in line with their local policies and contracts of employment. 

5. What is the mileage threshold? 

Similar to the previous mileage system, the dropdown threshold is where the reimbursement rate reduces after a certain number of miles travelled in a year. 

From 1 July 2026, the mileage dropdown threshold – the point at which the reimbursement rate reduces for car users - will increase from 3,500 miles to 4,500 miles.  The increase in the mileage threshold allowance means that the higher rate will apply for a greater number of miles each year, in recognition that some staff groups, particularly community staff and those working in rural settings, often travel significant distances for work.  

The mileage threshold counter will reset on 1 April 2027 and each April thereafter.  

6. Will the new mechanism be funded? 

Yes, additional funding will be issued in 2026/27, through usual funding flow mechanisms, to support the implementation of the agreed new mileage mechanism. 

7. Will there be any backdating arrangements?  

No, the new mileage reimbursement rates will apply prospectively to business journeys undertaken on or after 1 June 2026. The increase to the mileage threshold (from 3,500 to 4,500 miles) will apply from 1 July 2026.  

8. Will any changes in motoring costs trigger a change in the rates of reimbursement? 

If a review produces a change of more than a whole penny in value, mileage reimbursement rates will change. If the change is less than a whole penny, the mileage reimbursement rates will remain unchanged. 

9. What mileage is included in claims for reimbursement? 

Mileage reimbursement is payable for eligible business mileage only. 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. Where staff are required to work from a temporary or alternative work base, this should be managed in line with local travel and expenses policies. 

10. What happens if the employee normally starts their NHS business journeys from home? 

The terms and conditions require the employer and employee to agree the normal work base and the normal home to base return mileage. Where this applies, the normal home to base return mileage is deducted from claims for reimbursement. 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. 

For further information, see guidance for consideration when defining a work base for home and agile/hybrid working web page.

11. What if an employee starts doing more business miles at work?  

Reimbursement will be made regardless of the number of miles claimed for. There is no cap on the number of miles claimed.  

For car mileage, the rate of reimbursement depends on the mileage threshold, with the higher rate payable up to 4,500 miles per year and the lower rate payable thereafter, subject to the qualifying rules.  

For other vehicle types, the rate of reimbursement is at a single rate regardless of mileage.  

12. What is the reserve rate? 

The NHS Staff Council has agreed that the reserve rate will remain at 50 per cent of the unrounded value of the standard rate for car users (as set out in table 7, Section 17 of the NHS TCS Handbook).  This approach reflects existing arrangements and is not a new change. 

The reserve will apply to employees using their own vehicles for business purposes in the following situations:  

• where an employer has deemed that an employee has unreasonably declined the employer’s offer of a lease car (the assessment of what is deemed to be unreasonable is a matter for employees and employers to determine locally based on the circumstances)

• when employees are required to return to work, or when they work overtime (in line with Section 3) and incur additional travel to work expenses on that day

• when an employee is moved to a new base and incurs additional travel to work expenses 

• and in a limited number of other circumstances as detailed in Section 17 (paragraph 17.24). 

13.  What about costs for other road users (motorcycle/ pedal cycle) users?  

The mileage system contains rates of reimbursement for motorcycle and pedal cycle users (in table 7) .  

14. What about rates of reimbursement for lease car users? 

A lease car is a vehicle provided to an employee under a lease agreement, allowing them to use the vehicle for both NHS business and private purposes. Often referred to as a “company car”. It also refers to vehicles leased or owned by the employer and made available to employees for NHS business use only. 

Arrangements for the provision of lease cars to NHS staff, is the responsibility of local partnerships, informed by HMRC recommended rates. 

Principles underpinning lease vehicle policies are in annex 13 of the NHS TCS Handbook. 

15. Do NHS organisations have to use the new mileage agreement? 

Where employers in England already apply Section 17 provisions, the new changes will apply automatically. Where locally agreed alternative arrangements exist, for example approved mileage allowance payments (AMAP) rates, local parties may decide in partnership whether to retain the local agreement or implement the national system. 

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. 

16.  What green initiatives does the NHS have in place and how can employers support this?  

The NHS is committed to reducing its carbon footprint, including emissions associated with travel and transport.  

The NHS Ten-Year Health Plan commits to more healthcare being delivered in the community alongside an increase in digital interventions. In this context, it is important that employers are able to appropriately reimburse staff for necessary business travel, and that staff feel fairly reimbursed for the costs they incur.  

The new mileage reimbursement arrangements are not linked to engine size and continue to support a range of transport options, including motorcycles and pedal cycles, where this is consistent with efficient use of time and resources. 

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.  

NHS England has published Green Plan guidance to support ICBs and trusts to update their plans for the next three-year cycle. This guidance aligns with the NHS Net Zero Travel and Transport Strategy, published in 2023. The NHS net zero strategy and associated guidance can help organisations consider how unnecessary travel might be reduced and how greener alternatives may be used where this is compatible with service delivery and patient needs.  

17. What if an employee changes their car? 

Changing the type of car driven does not affect the mileage reimbursement rate staff receive for eligible business miles. Reimbursement rates are not linked to the engine size of vehicles. 

18. Is there a separate reimbursement rate which applies to hybrid and electric vehicles? 

No. The reimbursement rates for business travel set out in table 7 apply to all vehicle fuel types. The NHS Staff Council will now begin to review and develop recommendations on provisions for hybrid and electric vehicles. Further updates on progress will be communicated in due course.