The short answer: what counts and what does not
A journey between two client visits is business travel, so the mileage is claimable and the minutes behind the wheel count as working time. A journey from home to the first call of the day, or from the last call back home, is ordinary commuting, so in most cases it is neither. That one distinction drives almost every mileage and travel time decision a domiciliary care provider has to make, and it is the same line HMRC walks when it opens an enquiry.
Two separate sets of rules hang off that line. The first is tax: what you can pay a carer per mile without it becoming taxable earnings. The second is employment law enforced by HMRC: whether the carer's total pay, averaged across every hour worked including travel between calls, stays at or above the National Minimum Wage. Providers tend to know the first rule and miss the second, which is the expensive one. Our healthcare and care sector accountants see the same pattern on almost every domiciliary care payroll we take over: mileage paid correctly, travel time never costed into the wage calculation at all.
The numbers this year make both rules worth re-reading. April 2026 changed the two figures that matter most.
Mileage: the 2026/27 rates and how to pay them
For 2026/27 you can pay an employed carer up to 55p per mile for the first 10,000 business miles in the tax year and 25p per mile after that, completely free of tax and National Insurance. These are HMRC's Approved Mileage Allowance Payments, usually shortened to AMAP, and the 55p figure is new from 6 April 2026. The rate had been frozen at 45p since 2011, so for a typical carer driving 6,000 business miles a year the change is worth around £600 more per year tax free. The current figures are published in HMRC's mileage and fuel rates and allowances table.
Three practical rules sit behind the headline rate. Pay at or below 55p and nothing touches payroll. Pay above it and the excess is taxable earnings, which means PAYE and National Insurance through the payroll run by your payroll provider. Pay below it and the carer can claim Mileage Allowance Relief from HMRC on the difference, which costs you goodwill rather than money, because carers compare notes on which agencies pay the full rate. Travel time, mileage and the wages behind them all stack into one figure, which we break down in our guide to payroll cost for a domiciliary care agency with 50 carers.
What does the mileage payment actually cover? Everything. Fuel, insurance, servicing, tyres, depreciation. A carer paid the approved rate cannot claim anything extra for running costs, and you should not reimburse fuel receipts on top, because doubling up turns the whole arrangement taxable.
Can carers claim mileage from home to the first call?
Generally no. Home to the first visit and the last visit back home is ordinary commuting, the same as any employee driving to a fixed workplace, so it is not business mileage. The exception is rare: where home is genuinely the carer's base of work in more than name, some home-to-call travel can qualify, but HMRC reads that narrowly and the rota evidence has to support it. Treat the exception as something to take advice on, not something to assume.
Travel time and the National Minimum Wage averaging trap
Time spent travelling between care calls counts as working time for National Minimum Wage purposes. That single sentence, set out in HMRC's guidance on calculating the minimum wage, is responsible for more care sector arrears bills than any other rule. From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over, with £10.85 for 18 to 20 year olds and £8.00 for the under-18 and apprentice rates.
Here is how the trap works in practice. A carer does eight 45-minute calls in a day, six hours of contact time, paid at £14.00 an hour: £84.00. Sounds comfortably above minimum wage. Between those calls she drives for two hours. Her real working day is eight hours, and £84.00 divided by eight is £10.50 an hour. That is below £12.71, and no amount of generous-looking headline rate fixes it, because the law tests the average across the pay reference period, not the rate on the payslip.
Because the breach comes from the average and not the headline rate, it is worth stress-testing your own pay model against our guide to the minimum wage averaging trap for domiciliary carers.
Mileage payments do not rescue the average either. Money paid as reimbursement of expenses, including AMAP mileage, does not count as pay for minimum wage purposes. So a provider paying 55p a mile and £14.00 an hour for contact time only can still be in breach, while a provider paying £12.80 across every hour including travel is compliant. The arithmetic has to be done per carer, per pay reference period, against rota and travel data. Once headcount passes about 20 carers, that stops being a spreadsheet job and becomes something your payroll process has to test automatically every run. The same averaging test catches residential care homes on night cover, which we cover in our guide on sleep-in shifts and the minimum wage for care home owners.
Why does this matter more in domiciliary care than almost anywhere else? Because the sector runs on short calls spread across a postcode area, so travel can be 20 to 30 percent of the working day, and because HMRC has named the care sector as an enforcement priority for years. Registration with the Care Quality Commission also raises the stakes: a provider served with an NMW notice of underpayment has a financial viability problem to explain at its next CQC inspection conversation, and commissioners read the public naming lists.
What HMRC will disallow, and how providers get caught
HMRC disallows three things again and again in home care enquiries: round sum allowances, commuting claims and undocumented mileage. Each one looks harmless on the day it is set up.
Round sums first. Paying every carer £30 a week "for fuel" feels simple, but it is not an approved mileage payment because it is not calculated from actual business miles. The whole £30 is taxable earnings, so an enquiry produces backdated PAYE, both sets of National Insurance, interest and penalties, multiplied across the workforce and up to six years. The fix costs nothing: pay per recorded mile instead.
Commuting claims are the second pattern. A well-meaning coordinator includes home-to-first-call miles in the claim form because the carers asked, and three years later the provider is explaining to an inspector why a third of its mileage bill was private travel reimbursed tax free. The third pattern is the absence of logs entirely: mileage paid on trust, no dates, no journeys, no purpose. Without records the payments cannot be matched to business travel, and HMRC's opening position is that they are earnings.
How do providers get caught? Mostly through their own systems. Electronic call monitoring exists in nearly every domiciliary care business because commissioners require it, and it timestamps every arrival and departure at every client's door. HMRC requests the ECM export, the rota and the payroll, lines them up, and the gaps between calls become provable travel time while the mileage claims become checkable journeys. The evidence that convicts a non-compliant provider is the same data that protects a compliant one, which is the genuinely useful insight here: you already own the records, the question is whether your payroll uses them.
ECM data vs paid hours
HMRC lines up call monitoring timestamps against payroll. Gaps between calls that were never paid become travel time arrears.
Mileage logs vs round sums
Payments not built from recorded business miles are reclassified as taxable earnings, with PAYE and National Insurance backdated up to six years.
The averaging test
Total pay divided by all hours including travel must reach £12.71 for over-21s in every pay reference period, carer by carer.
Deductions that breach the floor
Uniform costs, DBS fees and training clawbacks deducted from pay can push an otherwise compliant average below the wage floor.
Employed carers vs self-employed carers: who claims what
Employed carers are paid mileage by the agency at the AMAP rates, and the agency carries the minimum wage obligation. That is the model nearly every CQC-registered provider runs, and everything above applies to it directly.
Self-employed carers work the other way round. A genuinely self-employed carer claims her own mileage through Self Assessment, either at the same flat rates, 55p then 25p for 2026/27, or by claiming actual vehicle costs, and no minimum wage applies because she is not a worker. The word doing the heavy lifting in that sentence is genuinely. HMRC challenges self-employment status in domiciliary care precisely because the model is sometimes used to make the travel time problem disappear. Where the agency sets the rota, supplies the clients, controls how care is delivered and the carer cannot send a substitute, the status fails, and reclassification hands the agency backdated PAYE, National Insurance and the full minimum wage exposure it thought it had avoided, travel time included.
Run a mixed model and the records matter twice over: once to evidence the employed carers' mileage and averages, and once to evidence that the self-employed carers are truly running their own businesses. If you are weighing up what specialist support for that looks like, our guide on what an accountant costs for a domiciliary care provider sets out the fee ranges by carer headcount.
Here is how the three common approaches actually compare for mileage and travel time compliance in a domiciliary care business:
| What you need | DIY / software | Generic accountant | LOYALS specialist |
|---|---|---|---|
| Tests NMW averaging with travel time, every pay run | ✗ Contact hours only | ✗ Annual check at best | ✓ Built into payroll |
| Pays mileage at the new 55p/25p rates with logs | ● If set up correctly | ● If asked | ✓ Rate change applied April 2026 |
| Uses ECM and rota exports as the evidence base | ✗ | ✗ | ✓ Standard onboarding step |
| Reviews self-employed carer status risk | ✗ | ● | ✓ Status review on file |
| Understands CQC viability and commissioner scrutiny | ✗ | ✗ | ✓ Care sector clients on the books |
| Open Mon to Sat for rota-hours questions | ✗ | ✗ Mon to Fri 9 to 5 | ✓ 10am to 7pm Mon to Sat |
This is why domiciliary care providers past about 20 carers tend to move from a generic accountant to a care sector specialist.
What this means for you: what to do this month
None of this needs a restructure. It needs the right data flowing into payroll and a handful of one-off decisions documented. The practical sequence looks like this.
- Update the mileage rate. If you are still paying 45p, move to 55p from 6 April 2026 or tell carers why you are not. Either way, document the decision.
- Kill any round sum fuel allowance. Replace it with per-mile payments built from recorded journeys before an enquiry does it for you.
- Run one averaging test now. Pick your three carers with the most spread-out rounds, add travel time between calls to their hours for the last pay reference period, and divide. If anyone lands under £12.71, you have your answer on priority.
- Wire ECM data into the wage calculation. The gaps between call timestamps are your travel time evidence. Use them proactively rather than waiting for HMRC to.
- Review self-employed carer arrangements. Substitution, control and who supplies the clients decide the status, not the contract's title page.
- Check deductions. Uniforms, DBS checks and training clawbacks deducted from pay reduce minimum wage pay. Recalculate any pay run where they bite.
Sequencing beats heroics here. A provider that fixes the rate, the logs and the averaging test this month has closed the three doors HMRC walks through most often, and has the evidence sitting in systems it already pays for.