HMRC Mileage Rate Increases to 55p Per Mile

The approved mileage rate for cars and vans has been increased from 45p to 55p per mile for the first 10,000 business miles each tax year. These rates apply only for using your own vehicle. Employees using company cars for business travel are subject to HMRC's separate Advisory Fuel Rates.

The increase has been backdated to 6 April 2026.

What are the New Mileage Rates?

Rate	Before	Now
Cars & Vans (first 10,000 miles)	45p	55p
Cars & Vans (over 10,000 miles)	25p	25p
Passenger Rate	5p	5p
Motorcycles	24p	24p
Bicycles	20p	20p

What Does It Mean for Employees?

Employers are not required to pay the full rate and, where employees receive less than 55p per mile, they may be able to claim tax relief on the shortfall from HMRC, but accurate mileage records would be essential. The actual tax saving depends on the employee's rate of tax.

For example, if an employer pays 45p per mile, the employee can claim tax relief on the missing 10p per mile.

What Does It Mean for Employers?

Businesses now have the option to increase mileage payments to the new rate without incurring a Class 1A National Insurance charge.

Employers adopting an increase should consider the impact on employment contracts, staff handbooks and expense policies before making any changes.

What Does It Mean for Partnerships and the Self-Employed?

Those using HMRC's simplified mileage method for 2026/27 can now claim:

• 55p per mile for the first 10,000 business miles.

• 25p per mile thereafter.

This increases the tax deduction available for business travel and may reduce taxable profits.

However, there is an important restriction. If you have already claimed actual vehicle costs (including capital allowances) for a vehicle, you cannot later switch to the mileage basis for that same vehicle.

The choice is made when the vehicle is first used in the business, but the higher rate may mean the mileage option becomes a more attractive option.

If you have any questions about the new mileage rates, or would like advice on claiming business travel expenses, please get in touch with us. We'll be happy to help.