HMRC Mileage Rates Rise to 55p Per Mile: What Businesses Need to Know in 2026

For the first time in 15 years, HMRC has increased its Approved Mileage Allowance Payment (AMAP) rate for employees and business owners using their own vehicles for business travel.

The change, announced by the Chancellor, Rachel Reeves, means that many businesses, employees and self-employed individuals will be able to claim more tax-free mileage expenses from the 2026/27 tax year onwards.

In this article, we explain what has changed, who is affected, and how much additional tax relief could be available.

What Are HMRC Mileage Allowance Rates?

HMRC's Approved Mileage Allowance Payments (AMAPs) allow employees and self-employed individuals to claim a fixed amount per business mile travelled using their own vehicle.

Rather than tracking fuel, insurance, servicing, repairs and depreciation separately, the mileage rate is designed to cover the overall cost of using a personal vehicle for business purposes.

What Has Changed?

The mileage rate for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles travelled in a tax year.

Vehicle Type	Previous Rate	New Rate
Cars and Vans (first 10,000 miles)	45p per mile	55p per mile
Cars and Vans (over 10,000 miles)	25p per mile	25p per mile
Motorcycles	24p per mile	24p per mile
Bicycles	20p per mile	20p per mile
Passenger Supplement	5p per mile	5p per mile

The increase applies to the first 10,000 business miles only. The rate for mileage above this threshold remains unchanged at 25p per mile.

When Does the Change Take Effect?

The new rate applies from 6 April 2026, the start of the 2026/27 tax year.

Although the announcement was made after the start of the tax year, the increase has been backdated to 6 April 2026, meaning businesses should review mileage claims already submitted for the current tax year.

Who Benefits?

The revised mileage rate could benefit:

• Employees who use their own vehicles for business journeys.

• Directors of limited companies claiming business mileage.

• Sole traders using HMRC's simplified expenses method.

• Employers reimbursing staff for business travel.

• Employees claiming Mileage Allowance Relief where their employer pays less than the approved rate.

Worked Example

Let's look at the impact of the change.

Sarah – Sales Manager

Sarah uses her personal vehicle to visit clients and travels 8,000 business miles during the year.

Calculation	Old Rate (45p)	New Rate (55p)
8,000 business miles	£3,600	£4,400

Additional allowable mileage claim: £800

This means Sarah's employer can reimburse an additional £800 tax-free, or Sarah may be entitled to additional tax relief if claiming Mileage Allowance Relief.

Higher Mileage Example

A business owner travels 15,000 business miles during the year.

Mileage Band	Rate	Allowance
First 10,000 miles	55p	£5,500
Remaining 5,000 miles	25p	£1,250
Total Claim		£6,750

Under the previous rules, the same journey would have generated a claim of £5,750, resulting in an increase of £1,000.

What Should Businesses Do Now?

Employers should review their mileage reimbursement policies and ensure payroll and expense systems are updated to reflect the new approved rate.

Businesses that have already processed mileage claims from 6 April 2026 may wish to review those claims and determine whether adjustments are required.

Self-employed individuals should also ensure they are using the correct rates when preparing their tax returns and calculating business expenses.

Don't Miss Out on Legitimate Tax Deductions

Mileage is just one of many business expenses that can reduce your tax bill. Many business owners fail to claim their full entitlement for travel costs, home office expenses, professional subscriptions, equipment purchases and other allowable deductions.

At Ledgers Accountants, we help business owners, contractors, sole traders and limited companies identify every legitimate expense available to them while remaining fully compliant with HMRC requirements.

Need Help Maximising Your Business Expense Claims?

Our experienced team can review your records, ensure you're claiming the correct mileage allowances, and help you identify other tax-deductible business expenses that could save you money.

Contact Ledgers Accountants today for expert advice and discover whether you're claiming everything you're entitled to.