After remaining frozen for more than a decade, HMRC’s approved mileage rate for personally owned cars and vans, is increasing from 45p to 55p per mile, backdated to 6 April 2026.
The change applies to the first 10,000 business miles travelled each tax year and will affect employers reimbursing team members for business travel, employees using their own vehicles for work and self-employed individuals claiming mileage expenses.
With fuel, insurance and maintenance costs having risen significantly in recent years, the increase is likely to be welcomed by both businesses and workers who regularly travel for work.
What are HMRC’s mileage rates?
Approved Mileage Allowance Payments (AMAPs) are HMRC’s approved rates for employees and self-employed individuals using their own vehicles for business journeys.
Employers can reimburse business mileage up to the approved rate tax-free, while individuals may be able to claim tax relief where they receive less.
From 6 April 2026, the rates are:
- 55p per mile for the first 10,000 business miles
- 25p per mile thereafter
Although announced on 21 May 2026, the increase applies retrospectively from the start of the 2026/27 tax year.
What does the change mean for employees?
Employees using their own vehicle for work journeys could now receive up to 55p per mile tax-free from their employer.
Where employers reimburse below the approved rate – or do not reimburse mileage at all – employees may be able to claim Mileage Allowance Relief through HMRC.
What does it mean for the self-employed?
Self-employed individuals using HMRC’s simplified expenses method will also benefit from the higher rate.
Someone travelling 6,000 business miles each year could now claim £3,300 in mileage expenses instead of £2,700 – an additional £600 deduction against taxable profits.
The updated rate applies to all eligible business mileage from 6 April 2026 onwards.
What should employers consider now?
Although businesses are not required to increase reimbursement rates to 55p, many may decide to review their policies in light of the change.
The increase is likely to be particularly significant for businesses with mobile workforces, where mileage costs can quickly add up across larger teams.
Employers should consider:
- whether current mileage rates remain appropriate
- the potential impact on travel and staffing budgets
- whether payroll and expense systems need updating
- how any backdated payments will be processed
Businesses paying above HMRC’s approved rate should also remember that any excess could create a taxable benefit for employees.
What counts as business mileage?
Business mileage generally includes journeys made wholly for work purposes, such as:
- visiting clients or customers
- travelling to temporary workplaces
- attending off-site meetings or training
Ordinary commuting between home and a permanent workplace does not qualify.
Keeping accurate mileage records remains essential to support any claims.
Preparing for the change
With the new rate applying from 6 April 2026, now is a good time for businesses to review existing expense policies and ensure systems are updated correctly.
Employees and self-employed individuals should also ensure that mileage records are accurate so that any available relief can be claimed.
How we can help
If you’d like advice on updating your mileage policy, reimbursing employees correctly or claiming mileage relief, our team can help.
Get in touch with PM+M to discuss how the changes could affect you or your business.
