Employer cutting mileage or travel expenses: can they?

Told your pence per mile is dropping from next month? Do not accept it on the spot. What you can do today is check where your rate is written, put any objection in writing, and test whether the cut would push your real hourly pay below the legal floor.

Can they cut it without your agreement?

No, if the rate is contractual. Yes, often, if it is genuinely discretionary. There is no general legal right to 55p a mile or to any fixed travel payment. Your right depends on what your employer promised and wrote down.

A rate is likely contractual if it is in your written contract or offer letter, in a staff handbook or expenses policy that your contract says forms part of your terms, in a collective agreement with a recognised union that is incorporated into your contract, or if it has been paid consistently for so long that it has become implied by custom and practice.

It may be non-contractual only if it sits in a separate policy that is clearly marked as non-contractual and has never been treated as a guaranteed term. The government response published on 22 October 2026 makes the same distinction: employers have not committed to a fixed rate where expenses sit only in a separate non-contractual policy.

How to check what your rate is worth

Find the exact words. Look in your written statement of terms, offer letter, contract variations, intranet expenses page, handbook introduction (does it say contractual or non-contractual?), and any union collective agreement for your grade.

Keep evidence of practice. Download or screenshot the policy, save three to six months of payslips showing mileage paid at the same rate, and save emails or rotas that tell you to drive between sites. If you are a carer, support worker, community nurse or delivery driver doing regular work miles, a long unbroken run of payments at one rate points to a contractual term.

If the contract contains a flexibility or variation clause, read it narrowly. It must cover expenses specifically, and the employer must still act reasonably, consult you and give reasonable notice. A vague right to amend any policy at any time does not give a free pass to slash a core term of pay.

What to do if they announce a cut

1. Do not silently accept it. If you just keep working and saying nothing, the law can treat that as accepting the new rate. Object clearly and quickly.
2. Put working under protest in writing. Email your manager: you do not agree, you will work under protest while you try to resolve it, and you reserve the right to claim the shortfall. Repeat that protest each payday while the lower rate continues.
3. Raise it collectively. A joint letter or grievance from several staff carries more weight than one complaint, and it protects individuals from being singled out. Ask your union to be involved.
4. Raise a formal grievance if informal talks fail. Set out the contractual term, what changed, what you are owed, and what you want restored. Acas guidance says try informal first, then put the grievance in writing.
5. Get free advice early. Acas (0300 123 1100), Citizens Advice, your local law centre and your union legal service are free. If pay may be below minimum wage, also contact HMRC via the Pay and Work Rights service.

Why you cannot claim it as unpaid wages

This is the trap most people fall into. Section 27(2)(b) of the Employment Rights Act 1996 expressly excludes any payment in respect of expenses incurred in carrying out employment from the legal definition of wages. So a tribunal will normally reject a claim for unpaid mileage brought as an unauthorised deduction from wages under section 13.

There are two exceptions. If the cut leaves you below the National Minimum Wage, the shortfall is an unlawful deduction and you can claim it. If a flat car allowance is paid as general pay regardless of costs incurred, different rules may apply and you need advice on the exact wording.

The normal route for cut expenses is breach of contract, not wages law. While you stay employed, that claim belongs in the civil courts. Only after employment ends can an employee bring a breach of contract claim in the Employment Tribunal, capped at £25,000.

When a cut pushes you below minimum wage

This is the fastest enforcement route for low paid staff. Under regulation 13 of the National Minimum Wage Regulations 2015, money you spend on work travel that your employer does not refund is taken off your pay when HMRC tests minimum wage. Reimbursed expenses do not count as pay under regulation 10.

Travel time between assignments also counts. Under regulation 34, time driving or travelling between care visits or client jobs is working time and must be paid. Home to first job and last job home as ordinary commuting does not count, unless the employer deducts transport costs from wages.

Rates in force from 1 April 2026 are £12.71 an hour for workers 21 and over, £10.85 for 18 to 20, and £8.00 for under 18s. Apprentices get £8.00 only if they are under 19, or aged 19 or over and in the first year of their apprenticeship. After that, they get the rate for their age. If unpaid mileage or unpaid travel time drags your effective rate below your age rate, that is an unlawful underpayment. Report it confidentially to HMRC or claim arrears as an unlawful deduction. The tribunal deadline in Great Britain is now 6 months less a day where the underpayment was on or after 1 October 2026.

The 55p rate, and what tax relief covers

HMRC Approved Mileage Allowance Payments are tax free limits, not a minimum wage your employer must pay. From 6 April 2026, under the Taxation (Energy and Vehicles) Act 2026, the car and van rate rose from 45p to 55p a mile for the first 10,000 business miles in the tax year. The old 45p figure still appears online, but it now applies only to backdated claims for years up to 5 April 2026.

If your employer pays less than the approved amount, you can claim Mileage Allowance Relief on the gap. It reduces your taxable income, not your tax bill pound for pound. A 20% basic rate taxpayer gets back 20% of the shortfall. You must have paid income tax that year, you cannot claim fuel, MOT, insurance or repairs separately when you use this relief, and you need a log with date, reason, start postcode and end postcode for each trip. You can claim for the current year plus the previous four years on GOV.UK.

Sacked for refusing a cut: now and from March 2027

Right now, sacking someone to force through a mileage cut is not automatically unfair. An employee with qualifying service must claim ordinary unfair dismissal or resign and claim constructive dismissal after a fundamental breach. In Great Britain that needs 2 years service for dismissals before 1 January 2027, then 6 months for dismissals on or after that date. The statutory Code of Practice on Dismissal and Re-engagement has applied in Great Britain since 18 July 2024, and a tribunal can increase or cut compensation by up to 25% for unreasonable failure to follow it.

Three limits matter. It will only protect contractual terms, not a genuinely non-contractual policy and not a change already allowed by a valid variation clause. Other expenses such as tools or uniforms that are not travel or accommodation sit under weaker enhanced fairness rules, not automatic unfairness. And it will not apply in Northern Ireland, where employment law is devolved.

1. 18 Jul 2024Fire and rehire Code in force

   Employers must consult in good faith and use dismissal and re-engagement as a last resort. Up to 25% uplift for breach.

2. 6 Apr 2026Mileage tax rate rises

   Car AMAP rate rises from 45p to 55p for the first 10,000 miles. Working from home tax relief ends for 2026 to 2027.

3. 1 Oct 2026Tribunal deadlines extend in GB

   Most tribunal limits move from 3 months to 6 months less a day. Scotland breach of contract follows on 9 Nov 2026.

4. 22 Oct 2026Expenses decision published

   Government confirms travel and accommodation expenses will be restricted variations. Regulations to follow.

5. 28 Oct 2026Budget makes the 55p rate permanent

   The Budget keeps 55p a mile for the first 10,000 business miles and raises the rate above 10,000 miles from 25p to 35p from 6 April 2027. These are tax-free limits, not a rate your employer must pay.

6. 1 Jan 2027Unfair dismissal qualifying period falls

   Down from 2 years to 6 months in Great Britain, and the compensatory award cap is removed.

7. Mar 2027Automatic unfair dismissal for mileage fire and rehire

   Scheduled start, Great Britain only. Exact day and wording await regulations.

Flexibility clauses and union agreements

A collective agreement can change your terms if your contract incorporates it. That is common in the NHS, local government and parts of retail and logistics where Agenda for Change or a joint negotiating body sets mileage. Check whether your statement says the agreement forms part of your contract. If it does, a union agreement to vary expenses can bind you even if you voted against it.

An individual flexibility clause is read strictly. It must be in writing, must cover the change being made, and must be exercised reasonably with consultation and notice. A clause that allows minor administrative changes does not allow a pay cut dressed as an expenses change. Acas guidance updated in July and October 2026 says the same: tell and consult staff, act reasonably, give time to adjust.

If 20 or more employees at one place are at risk of dismissal for refusing new terms within 90 days, collective redundancy consultation also applies. Since 6 April 2026 the maximum protective award for failure to consult in Great Britain is 180 days pay.

Agency staff, zero hours staff, Scotland and Northern Ireland

Agency workers get no help from equal pay rules here. After 12 continuous weeks in the same role with the same hirer, you are entitled to the same basic pay as a direct recruit, but the Agency Workers Regulations 2010 expressly exclude expenses from pay. A hirer can pay its own staff 55p a mile and leave you on less without breaking that rule. You keep minimum wage protection and the right to a Key Information Document before you agree terms.

Limb (b) workers, including many casual and zero hours staff who are not employees, cannot claim unfair dismissal or breach of contract in the tribunal. Your routes are minimum wage law and the county or sheriff court for breach of contract, plus Mileage Allowance Relief if you pay tax. Only employees who have started work will get the March 2027 automatic unfair dismissal protection.

In Scotland the substance is the same as England and Wales, but you sue in the Sheriff Court while still employed and tribunal breach of contract deadlines move to 6 months less a day only for terminations on or after 9 November 2026. In Northern Ireland the Employment Rights Act 2025 does not apply, so the March 2027 ban, the 6 month tribunal extension and the 6 month qualifying period do not apply there. Claims go to the Industrial Tribunal with Labour Relations Agency conciliation, breach of contract is capped at £25,000 with a 3 month limit, and unfair dismissal needs 1 year service. Minimum wage rates and HMRC mileage tax rules apply UK wide.