| New rate | 55p per mile (first 10,000 miles) |
| Previous rate | 45p per mile - unchanged since 2011 |
| Effective from | 6 April 2026 - backdated to start of tax year |
| Above 10,000 miles | 25p per mile - unchanged |
| People affected | Up to 3 million employees and self-employed |
| NIC threshold | Still 45p - transitional, no enforcement |
Last reviewed: 18 June 2026
HMRC's Approved Mileage Allowance Payment rate for cars and vans has risen from 45p to 55p per mile for the first 10,000 business miles in a tax year, backdated to 6 April 2026. The increase - the first in 15 years - was announced by Chancellor Rachel Reeves on 21 May 2026. Up to 3 million employees and self-employed people are expected to benefit. The previous 45p rate had been unchanged since 2011 despite significant increases in fuel, insurance and servicing costs.
What Employers Must Do Now
Because the change is backdated to 6 April 2026, any employer who has been reimbursing employees at 45p since the start of the tax year has been under-reimbursing. HMRC has confirmed backdated top-up payments can be made without tax or NIC consequences during the transitional period. Employers should run a report of all business mileage reimbursed since 6 April, calculate the 10p per mile shortfall on the first 10,000 miles per employee, pay the top-up through the next payroll run, and update the expense policy. Platforms including Concur, Pleo, Expensify and Xero Expenses have mostly pushed the rate update - check the system directly as some require a manual change.
A technical point most guidance misses: the NIC approved rate formally remains at 45p as the legislation has not yet been amended. HMRC has confirmed it will not enforce the 10p NIC gap during the transitional period, so employers can reimburse at 55p with no NIC consequences. The legislation will catch up in due course.
What Employees Must Do If Paid Below 55p
Employees reimbursed at less than 55p per mile can claim Mileage Allowance Relief from HMRC on the shortfall. The calculation: multiply business miles by 55p, subtract what the employer paid, claim tax relief on the difference through Self Assessment or form P87. An employee reimbursed at 35p on 8,000 miles receives 2,800 pounds. The AMAP ceiling is 4,400 pounds. The MAR claim is on 1,600 pounds. A basic rate taxpayer gets 320 pounds back; a higher rate taxpayer gets 640 pounds. Claims go via gov.uk/claim-tax-relief-for-your-job-expenses.
What Self-Employed People Must Do
Self-employed individuals using simplified expenses can claim 55p per mile for business travel from 6 April 2026. The rate applies directly against business profits in Self Assessment. Someone driving 12,000 business miles in 2026-27 can deduct 5,750 pounds (55p x 10,000 plus 25p x 2,000) compared to 4,950 pounds under the old rates - an 800 pound reduction in taxable profit. Those using the actual cost basis should consider whether the flat rate now produces a better outcome given elevated running costs.
Frequently Asked Questions
What is the new HMRC mileage rate for 2026-27?
The Approved Mileage Allowance Payment rate for cars and vans is 55p per mile for the first 10,000 business miles, and 25p per mile above that. The rate applies from 6 April 2026 and is backdated to cover the entire 2026-27 tax year. This is the first increase since 2011.
Do I need to do anything if my employer still pays 45p per mile?
You can claim Mileage Allowance Relief on the 10p shortfall through HMRC via form P87 or Self Assessment. Alternatively speak to your employer about updating their expense policy. HMRC is not enforcing the NIC gap during the transitional period but the income tax rate change is immediate.
Does the 55p rate apply to company car drivers?
No. The AMAP rate applies to employees using their own personal vehicles. Company car drivers are reimbursed using HMRC's Advisory Fuel Rates, a separate scheme published quarterly that was not changed by the May 2026 announcement.
