TL;DR - Key Points
- HMRC approved mileage rate for cars and vans rises from 45p to 55p per mile for the first 10,000 business miles each tax year.
- Announced by Chancellor Rachel Reeves on 21 May 2026, backdated to 6 April 2026 - the start of the 2026/27 tax year.
- First rate increase since 2011, frozen for 15 years despite rising fuel, insurance and maintenance costs.
- Affects employees using personal vehicles for work, employers setting reimbursement policies, and self-employed individuals claiming mileage relief.
- Motorcycle rate stays at 24p per mile; bicycle rate stays at 20p per mile.
Last reviewed: 28 May 2026
What Has Changed and When
The Approved Mileage Allowance Payment (AMAP) rate for cars and vans used for business travel has increased from 45p to 55p per mile for the first 10,000 business miles in a tax year. The rate for miles above that threshold remains unchanged at 25p per mile.
Chancellor Rachel Reeves announced the change in the House of Commons on 21 May 2026. The increase applies retrospectively from 6 April 2026, meaning all eligible business mileage from the start of the 2026/27 tax year falls within scope of the updated rate, even if reimbursement or claims are processed later.
The previous rate of 45p had been frozen since the 2011/12 tax year, a period over which fuel costs, insurance premiums and vehicle maintenance expenses rose substantially.
Who Is Affected
Employees using their own vehicles for work: Where an employer reimburses at or above 55p per mile, no further tax or national insurance is due on that amount. Where an employer pays below the approved rate, the employee can claim Mileage Allowance Relief from HMRC on the shortfall.
Employers setting reimbursement rates: Businesses are not legally required to increase their reimbursement rates to 55p, but any amount paid above 55p per mile becomes a taxable benefit. Employers paying less than 55p may see an increase in employee claims for Mileage Allowance Relief.
Self-employed individuals: Those using HMRC's simplified expenses method can now claim 55p per mile for the first 10,000 business miles, up from 45p. Someone travelling 8,000 business miles a year can now deduct £4,400 against taxable profits rather than £3,600, a difference of £800.
Updated AMAP Rate Schedule from 6 April 2026
| Vehicle type | First 10,000 miles | Above 10,000 miles | Change |
|---|---|---|---|
| Cars and vans | 55p per mile | 25p per mile | +10p |
| Motorcycles | 24p per mile | 24p per mile | Unchanged |
| Bicycles | 20p per mile | 20p per mile | Unchanged |
There is also a passenger rate of 5p per passenger per business mile where a fellow employee is carried on a business journey. This rate remains unchanged.
How Mileage Allowance Relief Works
If an employer pays nothing or pays below 55p per mile, an employee can claim Mileage Allowance Relief (MAR) directly from HMRC on the difference. Relief is given at the employee's marginal tax rate, typically 20% or 40%.
For example, if an employer pays 30p per mile and the employee drives 6,000 business miles, the unclaimed portion is 25p per mile, totalling £1,500. A basic rate taxpayer could reclaim £300 in tax relief through self-assessment or by contacting HMRC directly.
Claims for MAR can be made online via a personal tax account at gov.uk, by phone to HMRC, or through a self-assessment tax return for the 2026/27 tax year.
What Counts as a Business Mile
Business mileage covers travel to temporary workplaces, visits to clients or customers, and journeys between different work locations. It does not include ordinary commuting between a permanent home and a regular, fixed workplace. That travel is not eligible for AMAP relief regardless of distance.
HMRC guidance on what constitutes a temporary versus permanent workplace is available at gov.uk. Where doubt exists, particularly for employees with multiple work sites, it is advisable to keep a mileage log with dates, start and end points, and the business purpose of each journey.
Electric Vehicles
No separate AMAP rate has been introduced for electric vehicles. Employees using a personally owned electric car for business travel can claim 55p per mile on the same basis as petrol or diesel vehicles.
For employees using a company-provided electric vehicle, different rules apply. The Advisory Fuel Rate for fully electric company cars currently stands at 7p per mile and is reviewed quarterly by HMRC.
Retrospective Application and Employer Policy Reviews
Because the increase is backdated to 6 April 2026, employees who have already been reimbursed below 55p per mile since that date may have a claim for relief on journeys made in April and May 2026. Employers are advised to review their travel and expense policies to align with the new rate where appropriate.
Businesses that continue to reimburse below 55p are not in breach of any legal obligation, but should be aware that employees may submit MAR claims to HMRC for the difference.
Frequently Asked Questions
When does the new 55p mileage rate take effect?
The new rate is backdated to 6 April 2026, the start of the 2026/27 tax year. It was announced by the Chancellor on 21 May 2026 but applies to all eligible business mileage from 6 April 2026 onward.
Does my employer have to pay me 55p per mile?
No. Employers are not legally required to reimburse at the HMRC approved rate. However, if your employer pays less than 55p per mile, you may be able to claim Mileage Allowance Relief from HMRC on the difference, at your marginal rate of tax.
Can I claim for business miles already driven since April 2026?
Yes. Because the increase is backdated to 6 April 2026, relief on any shortfall between what your employer paid and the new 55p rate can be claimed for mileage driven since that date. Keep a record of journeys, dates and business purposes.
What is the mileage rate for electric cars?
No separate AMAP rate exists for personally owned electric vehicles. The standard 55p rate applies. For company-provided electric cars, the Advisory Fuel Rate of 7p per mile applies and is set separately by HMRC.
Does the rate change affect self-employed people?
Yes. Self-employed individuals using HMRC's simplified expenses method can now claim 55p per mile for the first 10,000 business miles in 2026/27, up from 45p. The claim is made through a self-assessment tax return.
Where is the official HMRC guidance on mileage rates?
The authoritative source is the gov.uk page on travel, mileage and fuel rates and allowances, maintained by HMRC. The updated rate schedule for 2026/27 was published on 21 May 2026.
