First Mileage Rate Increase
in 15 Years.
HMRC has raised the approved mileage rate from 45p to 55p per mile — the first increase since 2011. Here's exactly what changed, who it affects, and what you need to do right now.
For 15 years, the HMRC Approved Mileage Allowance Payment (AMAP) rate sat frozen at 45p per mile. During that time, fuel costs rose, vehicle running expenses increased, and millions of employees quietly subsidised their own business travel. That changed in April 2026.
Announced by Chancellor Rachel Reeves on 21 May 2026 and backdated to 6 April 2026, the new 55p rate is the largest single increase to AMAP rates in history — benefitting an estimated 2 million employees and 1 million self-employed individuals across the UK.
This guide breaks down exactly what changed, what the new rates mean in practice, who qualifies, and the steps employers and self-employed individuals need to take right now.
What Changed: Old Rate vs New Rate
The increase applies to cars and vans only, for the first 10,000 business miles in a tax year. All other rates remain unchanged.
Full Mileage Allowance Rate Table: 2026–2027 Tax Year
| Vehicle Type | First 10,000 Business Miles | Over 10,000 Business Miles | Previous Rate |
|---|---|---|---|
| 🚗 Car / Van (up to 3,500kg) | 55p per mile | 25p per mile | 45p per mile |
| 🏍 Motorcycle (over 50cc) | 24p per mile | — | 24p (unchanged) |
| 🚲 Cycle | 20p per mile | — | 20p (unchanged) |
| 👥 Passenger Payment | 5p per passenger/mile | — | 5p (unchanged) |
Rates set by HMRC. Apply from 6 April 2026 to 5 April 2027. These rates do not apply to company cars — advisory fuel rates apply separately and are reviewed quarterly.
Estimated annual saving for a worker driving 6,000 business miles — based on the 10p per mile increase across qualifying journeys. (Source: HM Treasury)
Who Does This Apply To?
Employees
Using your own car or van for qualifying business journeys — not your daily commute.
Self-Employed Individuals
Sole traders and freelancers using HMRC's simplified mileage expense method on Self Assessment.
Company Directors
Directors can claim for qualifying business journeys in a personally owned vehicle — not a company car.
This Does NOT Apply to Company Cars
The AMAP rate applies only when an employee or director uses their own personal vehicle for business travel. If you drive a company car, separate Advisory Fuel Rates (AFRs) apply — these are reviewed quarterly by HMRC and are unaffected by this announcement.
What Counts as Qualifying Business Mileage?
Not every journey qualifies. HMRC is clear on what's in and what's out:
It's Backdated — What Does That Mean for You?
The 55p rate applies retrospectively from 6 April 2026. The announcement came in May 2026, meaning some employers may have already reimbursed employees at the old 45p rate for April and May journeys. Here's what needs to happen:
Employers: Review April & May Claims
If you reimbursed employees at 45p per mile since 6 April 2026, you can pay the 10p per mile shortfall as a top-up — without Income Tax or National Insurance being due on the difference.
Self-Employed: Recalculate from April
If you've already logged mileage since 6 April 2026 at 45p, you can apply the full 55p rate to all qualifying miles from that date when completing your Self Assessment return.
Employees: Check Your Employer's Policy
Your employer is not legally required to pay the full 55p rate. If they pay less, you may be able to claim Mileage Allowance Relief (MAR) from HMRC on the difference — based on your income tax rate.
Directors: Update Your Records
If you've been tracking mileage since April at the old rate, update your records now to reflect 55p from 6 April. Accurate mileage logs are essential — HMRC expects records to support every claim.
Mileage Allowance Relief (MAR) — Don't Leave Money on the Table
If your employer reimburses you below 55p per mile — or doesn't reimburse you at all — you can claim MAR directly from HMRC on the difference. You don't get the full shortfall back; you receive tax relief on it based on your income tax rate. For a basic rate taxpayer, that's 20% of the difference. For higher rate taxpayers, it's 40%. Keep accurate mileage records to support your claim.
What Employers Need to Do Now
Update Your Mileage Policy
Review your employee expense and mileage reimbursement policy. Update the approved rate to 55p per mile for the first 10,000 business miles. Communicate the change clearly to your team.
Check for Backdated Top-Up Payments
Identify any employees reimbursed at 45p since 6 April 2026 and calculate the 10p per mile shortfall. Top-up payments can be made without tax or NIC implications up to the approved AMAP rate.
Update Payroll and Expense Systems
If mileage is processed through payroll, update your rate configurations. Overpayments above 55p per mile must be reported to HMRC and may be subject to tax and National Insurance.
Maintain Accurate Mileage Records
HMRC expects detailed records for every mileage claim — date, start and end point, business purpose, and miles driven. Many businesses now use mileage tracking apps to simplify this process.
How Accounting Crunchers Can Help
At Accounting Crunchers, we help businesses and self-employed individuals make sure every allowable expense is claimed correctly — and that HMRC rule changes like this one are applied from day one.
Whether you're an employer needing to update your mileage policy, a sole trader recalculating your Self Assessment expenses, or a director reviewing your vehicle claim records, our team handles it all:
Self Assessment Tax Returns
We ensure mileage and vehicle expenses are calculated at the correct rate and applied from the right date — maximising your allowable deductions.
Payroll & Expense Policy Review
We review your current mileage reimbursement setup, identify any backdated shortfalls, and update your policies to reflect the new HMRC rates correctly.
Mileage Allowance Relief Claims
If you're an employee underpaid by your employer, we can calculate and file your MAR claim with HMRC — making sure you receive the tax relief you're entitled to.
Bookkeeping & Records Management
We help you maintain HMRC-compliant mileage records throughout the year — so claims are clean, accurate, and audit-ready if HMRC ever asks.
We work with businesses across the UK, US, UAE, and Canada — from sole traders and freelancers to growing SMEs and group structures. Our team of Chartered Accountants, trained at the Big 4, makes sure you never miss a rate change or leave money on the table.
Make Sure You're Claiming the Right Rate
One conversation is all it takes to make sure your mileage claims, payroll, and expense policies reflect the new 55p rate from 6 April 2026.
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