For millions of employees and self-employed professionals across the UK, business travel is a regular part of work. Whether you are visiting clients, attending meetings, travelling between job sites, or managing field operations, using your personal vehicle for work can quickly become expensive.
HM Revenue and Customs (HMRC) has now updated the approved mileage rates for the 2026/27 tax year. From 6 April 2026, employees using their own car or van for business travel can claim 55p per mile for the first 10,000 business miles in a tax year, up from 45p per mile previously.
This latest HMRC mileage allowance update is expected to benefit employees, self-employed professionals, company directors, contractors, healthcare workers, consultants, tradespeople, and businesses across the UK.
What Is the New HMRC Mileage Allowance for 2026/27?
HMRC’s Approved Mileage Allowance Payments (AMAPs) are tax-free mileage rates that businesses can pay employees when they use their personal vehicles for business purposes.
The updated mileage allowance rates for 2026/27 are as follows:
| Vehicle Type | First 10,000 Business Miles | Above 10,000 Miles |
| Cars and vans | 55p per mile | 25p per mile |
| Motorcycles | 24p per mile | 24p per mile |
| Bicycles | 20p per mile | 20p per mile |
HMRC also allows an additional 5p per mile for each passenger carried on business journeys in a car or van, provided the passenger is a fellow employee travelling for work.
The main update is the increase from 45p to 55p per mile for cars and vans covering the first 10,000 business miles annually.
Why Has HMRC Increased the Mileage Rate?
The previous 45p mileage rate had remained unchanged for a long period, despite higher vehicle running costs across the UK.
Employees and businesses have faced rising expenses including:
- Higher petrol and diesel prices.
- Increased insurance premiums.
- Vehicle servicing costs.
- Tyre replacement expenses.
- Road tax and maintenance charges.
- General inflation.
The updated 55p mileage allowance is intended to better reflect the cost of using a personal vehicle for business travel and to provide more meaningful support for workers who rely on their own cars for work.
Who Benefits From the New HMRC Mileage Allowance?
The mileage allowance increase is expected to benefit a wide range of UK workers and industries.
This includes:
- Care workers.
- Community nurses.
- Consultants.
- Sales representatives.
- Engineers.
- Electricians.
- Plumbers.
- Construction workers.
- Delivery professionals.
- Self-employed contractors.
- Company directors.
- Field-based staff.
Businesses with travelling employees should also review reimbursement policies and payroll systems to ensure they remain aligned with HMRC’s updated rates.
What Counts as Business Mileage?
One of the most common questions employees ask is what actually qualifies as business mileage under HMRC rules.
Business mileage generally includes:
- Travelling to client meetings.
- Site visits.
- Travel between offices.
- Temporary workplace journeys.
- Business errands.
- Attending work-related events.
However, ordinary commuting between your home and permanent workplace does not count as business mileage.
Understanding the difference is important because incorrect claims could lead to HMRC compliance issues or rejected tax relief claims.
Example: How Much More Could Employees Receive?
The increase from 45p to 55p per mile may seem modest at first, but over a full tax year it can make a noticeable difference.
Example Calculation
If an employee travels 8,000 business miles annually:
Previous HMRC rate:
8,000 × 45p = £3,600
New HMRC rate:
8,000 × 55p = £4,400
Additional tax-free reimbursement:
£800 extra annually
Employees reaching the full 10,000-mile threshold could receive up to £1,000 more in tax-free reimbursement compared with the previous rate.
For professionals who rely heavily on travel, this increase may help offset rising operating costs significantly.
Can Employees Claim Tax Relief If Employers Pay Less?
Yes.
If your employer reimburses business mileage at less than HMRC’s approved mileage allowance, you may still be eligible to claim Mileage Allowance Relief from HMRC.
For example:
- HMRC approved rate = 55p per mile.
- Employer reimbursement = 40p per mile.
- Difference claimable = 15p per mile.
Employees can usually claim relief through:
- Self Assessment tax returns.
- HMRC online services.
- Form P87 for employment expenses.
This is particularly important for employees working in sectors where lower mileage reimbursements are common.
Can Employers Pay More Than 55p Per Mile?
Yes, businesses can choose to reimburse employees above the HMRC approved mileage allowance.
However, any amount above the approved rate is generally treated as taxable earnings and may be subject to PAYE and National Insurance.
For that reason, many UK businesses choose to follow HMRC approved mileage rates to remain tax efficient and compliant.
What Costs Does the Mileage Allowance Cover?
The approved mileage allowance is designed to cover the overall cost of running a personal vehicle for work purposes.
This generally includes:
- Fuel costs.
- Vehicle servicing.
- Repairs and maintenance.
- Insurance.
- MOT expenses.
- Tyres.
- Road tax.
- Vehicle depreciation.
Some travel expenses may still be claimed separately, including:
- Parking charges.
- Congestion charges.
- Toll fees.
However, penalties or driving fines are not allowable business expenses under HMRC rules.
Mileage Tracking Is More Important Than Ever
With the increased mileage allowance offering greater reimbursement potential, maintaining proper mileage records is more important than ever.
HMRC may request supporting evidence including:
- Travel dates.
- Start and destination locations.
- Purpose of journeys.
- Total business miles travelled.
Keeping accurate records can help businesses and employees avoid disputes, rejected claims, or compliance issues during HMRC reviews.
Many businesses now use digital mileage tracking systems or expense management software to simplify the process.
What This Means for UK Businesses
Businesses across the UK should review their mileage reimbursement policies to ensure they reflect the current HMRC rates.
Key actions may include:
- Updating payroll systems.
- Reviewing employee expense policies.
- Informing staff about the new mileage rates.
- Updating travel reimbursement procedures.
- Reviewing annual travel budgets.
Employers who continue using outdated mileage rates may see more employees submitting HMRC tax relief claims independently.
Impact on Self-Employed Professionals
The updated mileage allowance rates also support self-employed individuals who use HMRC simplified expenses methods.
Freelancers, contractors, sole traders, and small business owners who rely on personal vehicles for work can benefit from improved tax efficiency and increased allowable business travel deductions.
Industries likely to benefit include:
- Construction.
- Property maintenance.
- Healthcare.
- Consulting.
- IT services.
- Engineering.
- Delivery services.
Need Help Understanding HMRC Mileage Rules?
HMRC mileage regulations can sometimes feel confusing, especially when reimbursement policies, tax relief claims, allowable business expenses, and compliance rules are involved.
At Brayan & Spencer Associates, we regularly support UK businesses, company directors, employees, and self-employed professionals with practical guidance related to tax efficiency, payroll matters, mileage claims, and HMRC compliance.
Our advisers understand how frequently UK tax regulations evolve and work closely with clients to provide personalised guidance based on their individual financial and business circumstances.
As a proactive accounting firm in London, our focus is on helping clients understand tax responsibilities clearly while improving compliance and financial efficiency through practical support and accurate advice.
HMRC Mileage Rates 2026/27: Quick Summary
Here’s a quick overview of the latest mileage allowance changes:
- 55p per mile for the first 10,000 business miles.
- Effective from 6 April 2026.
- Previous rate was 45p per mile.
- 25p per mile continues after 10,000 miles.
- Applies to cars and vans.
- 5p per passenger per mile may also apply for work journeys.
- Tax-free within HMRC approved limits.
- Employees may claim Mileage Allowance Relief if under reimbursed.
- Accurate mileage records remain essential.
Final Thoughts
The HMRC mileage allowance increase for 2026/27 is one of the most important business travel reimbursement updates in recent years.
For employees and self-employed professionals facing rising travel costs across the UK, the move from 45p to 55p per mile provides meaningful financial support and improved tax efficiency.
Businesses should now take time to review travel expense policies, update payroll procedures, and ensure employees understand the latest HMRC mileage rules before the 2026/27 tax year begins.
With proper record keeping and updated reimbursement processes, both employees and employers can benefit from the new mileage allowance changes while remaining compliant with HMRC regulations.
Frequently Asked Questions
HMRC has increased the mileage allowance for cars and vans to 55p per mile for the first 10,000 business miles from 6 April 2026.
The updated HMRC mileage allowance comes into effect from 6 April 2026 for the 2026/27 tax year.
Yes. Employees may claim Mileage Allowance Relief from HMRC if employers reimburse below the approved rate.
No. Normal commuting between home and a permanent workplace is not considered business mileage by HMRC.
Yes. HMRC approved mileage allowance payments are generally tax-free within approved limits.
Yes. Self-employed workers using HMRC simplified expenses can apply the updated mileage rates where applicable.
Employees and businesses should maintain records including dates, mileage, destinations, and business purposes of journeys.
Yes. Parking charges, congestion charges, and toll fees may usually be claimed separately from mileage allowance.
The increase reflects rising fuel prices, insurance costs, vehicle maintenance expenses, and inflation affecting UK workers and businesses.
Industries involving regular travel such as healthcare, construction, engineering, consulting, sales, and field services are expected to benefit the most.
