If you use your own car for work — to visit clients, travel between sites, or collect supplies — there’s genuinely good news from HMRC this year. The approved mileage rate has gone up for the first time in 15 years.
From 6 April 2026, the rate increased from 45p per mile to 55p per mile for the first 10,000 business miles you drive each tax year. It might not sound like a huge jump, but when you add it up over a full year, it makes a real difference — and there are steps you may need to take to make sure you’re claiming everything you’re entitled to.
A Long Time Coming
The Approved Mileage Allowance Payment (AMAP) rate has been frozen at 45p per mile since 2011. That is not a typo. While fuel prices have risen, cars have become more expensive to run, and general living costs have climbed, the rate you could claim — or pay your staff — tax-free for using a personal vehicle for business travel stayed completely unchanged for a decade and a half.
Imagine you run a plumbing business in Ipswich and your engineer drives their own van to jobs around Suffolk every day. For 15 years, you could reimburse them at 45p per mile without either of you paying tax on it. Meanwhile, the real cost of running that van — fuel, servicing, tyres, insurance — kept rising. The AMAP rate simply did not keep pace.
The government announced the increase in Spring 2026 as part of a package of measures to reflect the reality of rising motoring costs. The new 55p rate applies from 6 April 2026 — the start of the current 2026/27 tax year.
What Are the New Rates?
Here are the updated AMAP rates from 6 April 2026:
- Cars and vans: 55p per mile for the first 10,000 business miles in the tax year; 25p per mile for anything above that threshold
- Motorcycles: 24p per mile (unchanged)
- Bicycles: 20p per mile (unchanged)
- Passengers: If you carry a colleague in your car on a business journey, you can claim an additional 5p per passenger per mile (unchanged)
The 25p rate above 10,000 miles has not changed, which is worth bearing in mind if you or your staff drive very high mileage for work.
What Does This Mean in Pounds and Pence?
Let’s put some numbers on it. Say you drive 8,000 business miles in the 2026/27 tax year. At the old 45p rate, the maximum tax-free amount was £3,600. At the new 55p rate, it is £4,400. That’s an extra £800 that can be paid or claimed completely free of income tax and National Insurance.
Drive a full 10,000 business miles and the difference compared with last year is £1,000. For a basic-rate taxpayer claiming Mileage Allowance Relief on unreimbursed mileage, that extra £1,000 in relief could translate to around £200 back in their pocket. A higher-rate taxpayer could save £400. These are not trivial sums — especially if you have been under-claiming since the new tax year began in April.
If You Are Self-Employed
If you run a business as a sole trader or a partnership, you can use the flat mileage rate rather than calculating actual running costs such as fuel, oil, servicing, depreciation, and insurance. This is called the simplified mileage method, and it follows the same AMAP figures.
So if you’re a self-employed electrician in Woodbridge, a mobile hairdresser in Stowmarket, a freelance consultant who drives to client meetings in Ipswich, or a landlord driving to your rental properties across Suffolk — from 6 April 2026, you can claim 55p per mile for your first 10,000 business miles each tax year.
Here’s an example. Imagine you run a small events catering business in Bury St Edmunds and drive 12,000 miles a year visiting venues, meeting suppliers, and delivering equipment. Under the old rate, your mileage claim was £4,500 on the first 10,000 miles, plus £500 for the remaining 2,000 — a total of £5,000. From April 2026, that first 10,000 miles earns you a deduction of £5,500. That’s an extra £500 in allowable expenses, reducing your taxable profit — and your tax bill — directly.
One important point to bear in mind: once you have chosen the simplified mileage method for a particular vehicle, you generally have to stick with it for the life of that vehicle in your business. You cannot swap between claiming actual costs and the flat rate from year to year, so it is worth thinking about which approach is right for you when you first start using a vehicle for business purposes. If you’re unsure which method will save you more, we can help you work it out.
If You Are an Employer
If you reimburse employees or directors who use their own vehicles for business travel, the new 55p rate is the maximum you can pay them completely free of tax and National Insurance. You can choose to pay less — but any amount up to 55p per mile (for the first 10,000 business miles in the year) is exempt for both parties. Anything above 55p becomes a taxable benefit.
Here is what you should consider doing right now:
- Check your expenses policy. If it still says 45p, update it to 55p. While you are not legally required to pay the full rate, doing so is a tax-efficient way of reflecting the real cost of employees using their own vehicles for your business.
- Look back to 6 April. If you have been reimbursing staff at 45p since the start of the 2026/27 tax year, consider whether to pay a top-up for journeys already made. For an employee who has done 3,000 business miles since April, the difference is £300. It is better to address this now than to leave it until year end.
- Update your payroll and expenses system. Make sure your software or internal process reflects the new rate so that all claims from April 2026 onwards are processed correctly.
- Review your fleet arrangements. If some staff use company cars and others use personal vehicles, the rules can differ. Talk to us if you are not sure how the updated rates apply across your workforce.
If You Are an Employee
If your employer reimburses you at the full 55p rate, you do not need to take any further action. But what if your employer pays you less than 55p per mile — or does not reimburse you at all? In that case, you can claim the shortfall as Mileage Allowance Relief (MAR) from HMRC.
Here is how the maths works. Say your employer pays you 40p per mile and you do 6,000 business miles in the 2026/27 tax year:
- Maximum tax-free amount at the approved rate: 6,000 × 55p = £3,300
- Amount actually received from your employer: 6,000 × 40p = £2,400
- Mileage Allowance Relief you can claim from HMRC: £900
You can make this claim through your Self Assessment tax return if you complete one, or through HMRC’s form P87 if you do not normally file a Self Assessment return. HMRC will then adjust your tax code or send you a refund. This is one of those reliefs that many employees simply do not know exists — and if your employer has been reimbursing you below the approved rate for years, you may have been missing out for some time.
What Counts as a Business Journey?
This is one of the questions we are asked most often. The short answer: your regular commute from home to your normal place of work does not qualify. Business mileage is travel you carry out as part of your work — not travel to get to work.
Journeys that generally do qualify include:
- Visiting a customer or client at their premises
- Travelling between different work locations or sites
- Attending a supplier, trade event, or business meeting away from your usual workplace
- A landlord driving to a rental property to carry out an inspection, manage repairs, or meet a tenant
Journeys that generally do not qualify include your regular daily commute and personal journeys, even if you happen to take a work call on the way. If you work from home, the rules around what counts as a qualifying business journey can be a little more flexible — but it is always worth checking your specific circumstances with us before making a claim, to make sure you are on solid ground.
Keep Good Records
Whether you are self-employed or an employee claiming Mileage Allowance Relief, HMRC expects you to keep records of your business mileage to support any claim. A simple mileage log is all you need — a spreadsheet, a notebook, or one of many free apps available on your phone. Each entry should record:
- The date of the journey
- The purpose (client name, job address, type of visit, etc.)
- The start and end locations, or the number of miles driven
HMRC can ask to see your records if they have a question about your expenses, so keep them somewhere safe and try to update them regularly — it is much easier than trying to reconstruct a year’s worth of journeys from memory later.
Making Tax Digital and Your Mileage Claims
If you are a sole trader or landlord who moved onto Making Tax Digital for Income Tax this year — April 2026 was the start date for those with turnover or rental income over £50,000 — your mileage expenses will form part of the quarterly digital updates you submit to HMRC.
Now is a good moment to check that your accounting software has been updated to reflect the new 55p rate rather than the old 45p figure. If you use QuickBooks, Xero, FreeAgent, or another MTD-compatible tool, check the mileage settings. If you are not sure whether your software is capturing things correctly, we can take a look with you.
What This Means for You
Here is a quick summary of the actions to consider:
- Sole traders: Update your records and accounting software to use 55p per mile from 6 April 2026. Review any submissions you have made since then and correct them if needed.
- Landlords: If you drive to your rental properties for legitimate business purposes, make sure you are claiming the full new 55p rate.
- Employers: Review your expenses policy, consider a top-up for staff mileage payments made since April at the old rate, and update your payroll and expense systems.
- Employees: If your employer reimburses you at less than 55p per mile, claim Mileage Allowance Relief via Self Assessment or HMRC form P87.
The change applies from 6 April 2026, the start of the 2026/27 tax year. If you have been using the old 45p rate since then — whether in your own self-employed accounts or in your business’s staff expense policy — now is the time to put it right, while the year is still early enough to make a clean correction.
This is a general guide, not personal advice — please check with us about your own situation.
