Pick the annual mileage that matches what you genuinely drive, then add a small buffer - usually 10-15%. Higher mileage costs more each month because it lowers the car's forecast value at the end of the term. Going over is charged at a set pence-per-mile rate on handback, so it pays to get the number roughly right at the start.
Key Takeaways
- Your contracted mileage is a total: annual allowance × contract years. A 3-year lease at 10,000 miles a year gives you 30,000 miles, however you spread them.
- The average UK car covers around 7,100 miles a year, but new and leased cars typically do more - which is why 10,000 miles a year is the default starting point on most quotes.
- Buying miles upfront is usually cheaper per mile than paying excess at the end - but only if you use them. Unused miles are not refunded by most funders.
- Excess mileage rates vary by funder and vehicle value, from a few pence per mile on small volume cars to 20-30p or more on premium models. The rate is printed in your agreement before you sign.
- Compare quotes on the same term, initial rental and mileage. Change any one of the three and the monthly figures stop being comparable.
What's in this guide
- How do I choose the right annual mileage?
- How much does extra mileage add to the monthly payment?
- Why does mileage change the price at all?
- How to work out your real annual mileage in five minutes
- What happens if I go over my mileage?
- Can I change my mileage during the lease?
- Mileage on electric cars, vans and company cars
- Frequently asked questions
How do I choose the right annual mileage?
Start with what you actually drove last year, not what you hope to drive. Check the odometer readings on your last two MOT certificates, work out the difference, then add 10-15% as a buffer. Round up to the nearest 1,000. That number, not a guess, is the one to quote.
Most people underestimate. The commute is easy to count; the school run, the trip to see family in Devon, the summer holiday drive to Cornwall and the two weekends of moving a teenager into halls are the miles that quietly push a 9,000-mile year to 11,500.
For context, Department for Transport National Travel Survey data puts the average UK car at roughly 7,100 miles a year. But leased cars skew higher - they're new, they're often the main household car, and they're frequently doing the commuting. That's why 10,000 miles a year is the default on most lease quotes, and why we'd treat it as a starting point rather than an answer.
| Annual mileage | Typically suits | Watch out for |
|---|---|---|
| 5,000 - 8,000 | Second cars, urban drivers, retired households, short commutes under 5 miles each way | One long summer holiday can eat 1,500 miles of a 6,000-mile allowance |
| 10,000 | The standard default - a 15-20 mile commute plus normal family use | The saving versus 8,000 miles is usually small, so don't shave it to save pennies |
| 12,000 - 15,000 | Longer commutes, family cars covering weekend trips, hybrid workers with a 30-mile drive | The sweet spot most people should be in but quote themselves out of |
| 20,000 - 30,000 | Field sales, contractors, regional roles, drivers covering motorway miles daily | Fewer funders quote at this level and the monthly step-up gets steeper |
| 30,000+ | Rare on car contract hire - specialist funders only | Availability, not price, is the constraint. Talk to us before you commit |
Two rules of thumb from arranging leases for over 25 years. First: if you're hovering between two figures, take the higher one. The monthly difference is nearly always smaller than the excess charge you'd face later. Second: if your driving genuinely can't be predicted - a new job, a possible house move, a business that might expand - say so when you get your quote, because the shorter contract term is often the better answer rather than a bigger mileage allowance.
How much does extra mileage add to the monthly payment?
Moving up one mileage band - say 10,000 to 12,000 miles a year - typically adds a modest amount to the monthly rental rather than transforming it. The step is bigger on expensive cars and on models with strong used demand, and bigger again once you go past 20,000 miles a year. There's no fixed formula: every funder prices it against that specific vehicle.
What you can do is test whether the upgrade is worth it. Take the extra monthly cost, multiply by the number of monthly payments, then divide by the extra miles you're buying. That gives you an effective pence-per-mile for the upgrade. Compare it with the excess mileage rate in the quote. If the upgrade is cheaper per mile and you're confident you'll use the miles, take the upgrade.
A worked example (illustrative figures only)
You're looking at a 48-month contract on a 9+47 profile - nine months' rental paid upfront, then 47 monthly payments. At 10,000 miles a year you'd have 40,000 miles in total. You think you'll do about 12,500.
Option A - stay at 10,000 miles/year. You return the car at 50,000 miles. That's 10,000 miles over. At an excess rate of 9p per mile: 10,000 × £0.09 = £900 (plus VAT where applicable).
Option B - take 12,500 miles/year. Say that adds £15 a month. Over 47 monthly payments that's 47 × £15 = £705, and you'd have 50,000 miles contracted. Effective cost of the extra 10,000 miles: £705 ÷ 10,000 = 7.05p per mile - below the 9p excess rate.
Option B wins, by roughly £195 - provided you actually drive the miles. Come in at 40,000 and you've paid £705 for nothing. That's the whole trade-off in one sum.
Why does mileage change the price at all?
A lease rental is built from the gap between what the vehicle costs to acquire and what it's forecast to be worth at the end of the term - its residual value - plus interest charges. Mileage moves the residual value. A car handed back with 60,000 miles is worth less on the used market than the same car with 30,000, so the gap the rental has to cover is wider.
That's also why the excess mileage rate isn't a penalty in the punitive sense. It's the funder recovering value the extra miles took off the car. Higher-value vehicles carry higher pence-per-mile rates because every additional mile knocks more off a £60,000 saloon than a £20,000 hatchback.
So is a lower mileage always the cheaper option?
On the monthly figure, yes. Over the life of the contract, not necessarily. Under-quoting your mileage moves cost from a payment you've budgeted for into a bill at handback that you haven't. Honestly, we'd rather quote you £15 a month more now than have you find £900 in year four.
One caveat when you're shopping around: mileage is one of the three levers that change a monthly price, alongside contract term and initial rental. A quote at 8,000 miles will always look better than one at 15,000 on the same car. Compare like with like - same term, same initial rental, same mileage - or the comparison tells you nothing. Our guide to what an initial rental is and how it works covers the other half of that.
How to work out your real annual mileage in five minutes
The fastest reliable method uses your MOT history, which records the odometer at every test. Two consecutive readings twelve months apart give you a real figure rather than a guess. If your current car is under three years old and has no MOT yet, build the number from your weekly pattern instead.
Check your MOT history
Look up your registration on the DVSA's MOT history service on GOV.UK. Subtract last year's odometer reading from this year's. That's your baseline.
Add the commute properly
Round-trip miles × days in the office × 46 working weeks. Hybrid working changes this more than people expect - recalculate if your pattern has shifted.
Add the big one-offs
Holidays, festivals, weddings, visits to relatives, caravan trips. List them, add the round-trip mileage, and be honest about the total.
Add a 10-15% buffer, then round up
Life happens over three or four years. A 12,000-mile estimate becomes 13,500, which you'd round to 14,000 on the quote.
One more check worth doing: think about whether the car you're leasing will change your driving. A comfortable diesel estate tends to attract long journeys a city runabout never did. Families who switch from one car to two often see the new car take on the miles. We see both patterns regularly.
What happens if I go over my mileage?
You pay an excess mileage charge on handback, calculated as the miles over your total contracted allowance multiplied by the pence-per-mile rate stated in your agreement. It's arithmetic, not a judgement call - unlike condition charges, there's nothing to dispute if the odometer reading is right. Rates vary widely by funder and vehicle value.
Rates can be as low as a few pence per mile on small, high-volume cars, sit in the region of 6-15p for many mainstream models, and reach 20-30p or more on premium and luxury vehicles on manufacturer finance. The BVRLA doesn't set the rate - it's a commercial term between you and the funder, disclosed in the same schedule that shows your monthly rental. Read it before you sign.
Under the BVRLA Code of Conduct, members should provide clear and transparent details of any excess mileage charges, and where end-of-contract charges are raised they should be communicated to the customer no later than four weeks after the vehicle is collected. Excess mileage appears as a separate line from any fair wear and tear charges - fair wear and tear being the acceptable deterioration from normal use, assessed against the BVRLA's published standard at the return inspection.
Worth knowing: high-mileage cars tend to attract condition charges too. More miles means more stone chips, more kerbed alloys and a more tired-looking cabin. The two bills often arrive together. Our full breakdown of how excess mileage charges are calculated goes deeper on the handback process, and the fees to expect when leasing covers what else can appear.
| Approach | Pay for miles upfront (higher allowance) | Pay excess at the end |
|---|---|---|
| Cost per mile | Usually lower | Usually higher, and fixed in the contract |
| Budgeting | Spread across the monthly payment | One lump sum after the car has gone |
| If you drive less than expected | You've overpaid - no refund from most funders | You pay nothing extra |
| If you drive far more than expected | Still cheaper overall | Can run into four figures |
| Best when | You're confident about your mileage, or you're likely to exceed by a meaningful margin | You'll be marginally over at most, or your driving is genuinely unpredictable |
Can I change my mileage during the lease?
Often, yes. Many funders allow a mid-contract mileage amendment, adjusting your remaining monthly payments to reflect a higher total allowance. It's discretionary, subject to each funder's own criteria, and it works best when you flag it early - once you're already well over, the amendment saves far less.
Practically: check your odometer against your contract at the end of year one. Contracted annual allowance × years elapsed tells you where you should be. If you're running 20% ahead at that point, call us. A change made in month twelve of a forty-eight-month contract spreads the cost over 36 remaining payments; the same request in month forty rarely helps.
What if I drive fewer miles than I paid for?
You won't normally get anything back. Most UK contract hire agreements treat the mileage allowance as a ceiling, not a two-way adjustment - there's no refund for unused miles. Some funders will consider reducing the contracted mileage mid-term, but it's far less commonly offered than an increase. This is precisely why over-buying mileage "to be safe" isn't free.
Mileage on electric cars, vans and company cars
The mechanics are identical across vehicle types - contracted total, pence-per-mile excess, no refund for unused miles. What changes is the typical mileage and the tax treatment. RAC Foundation analysis of 2024 data found battery-electric cars under three years old averaged just over 10,000 miles a year, close to equivalent diesels, so the old assumption that an EV is a low-mileage second car no longer holds.
Electric cars
Quote your EV mileage the same way you'd quote a petrol car's. If you're switching from a combustion car, don't reduce your estimate on the assumption you'll drive less - the running cost per mile falls on home charging, which if anything nudges mileage up. Our electric car guide covers range planning and charging in more detail.
Company cars and salary sacrifice
Your contracted mileage has no effect on your Benefit in Kind (BiK) tax - the taxable benefit on a company car is based on the vehicle's P11D list price and its CO2 emissions band, not on how far you drive it. Under HMRC's published company car tax rates, zero-emission cars sit at 4% of list price for the 2026/27 tax year, while petrol and diesel cars fall roughly in the 15-37% range depending on emissions. Business mileage reimbursement is separate again: HMRC's Approved Mileage Allowance Payments allow 45p per mile for the first 10,000 business miles in a tax year and 25p thereafter for cars and vans, tax-free.
If you're considering an EV through work, salary sacrifice is worth understanding alongside Business Contract Hire (BCH) - the lease where a company hires the vehicle and hands it back at the end.
Vans
Commercial vehicles routinely need 20,000 miles a year or more, and funders will generally quote higher allowances on vans than on cars. Be realistic about seasonal peaks - a business that's flat out from March to September will cover far more ground than a twelve-month average suggests. You can see current van leasing deals across the main manufacturers.
Not sure what mileage to pick? Talk it through
Give us your commute, your usual trips and a rough sense of how settled your driving is, and our team will price the same vehicle at two or three mileage levels so you can see the actual difference rather than guess at it. No obligation, no pressure - and we'll tell you honestly if the lower allowance is the sensible call.
Call 0333 003 3325 - or browse deals and we'll build the quote around your numbers.
Frequently Asked Questions
Once you've settled on a mileage, the next thing worth doing is sanity-checking the total cost of the contract - not just the monthly figure. Our guide to budgeting for a car lease walks through the whole picture, initial rental included.
Sources
- NTS09: Vehicle mileage and occupancy - Department for Transport, GOV.UK
- Leasing: Frequently Asked Questions - British Vehicle Rental and Leasing Association (BVRLA)
- Check the MOT history of a vehicle - DVSA, GOV.UK
- Travel - mileage and fuel rates and allowances - HM Revenue & Customs
Written by the leasing team at First Vehicle Leasing. We've arranged personal and business vehicle leases for UK drivers for over 25 years, and we're authorised and regulated by the Financial Conduct Authority and a member of the BVRLA. Questions about mileage on a specific quote? Call our team on 0333 003 3325.
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