HMRC mileage rate increases to 55p per mile – what does it mean for you?
On 21 May 2026, the government announced that HMRC’s approved mileage rate for cars and vans would increase from 45p to 55p per mile for the first 10,000 business miles. Unusually, the change was backdated to 6 April 2026.
Yes, you read that right!
After years of the approved mileage rate sitting at 45p per mile, HMRC has finally increased it.
From 6 April 2026, the approved mileage rate for cars and vans is now:
- 55p per mile for the first 10,000 business miles
- 25p per mile for any business miles over 10,000
And just to make things interesting, the change was announced after the new tax year had already started and has been backdated to 6 April 2026.
So, what does this actually mean for you and your business?
Let’s break it down.
What is the 55p mileage rate?
If you use your own car or van for business journeys, you may be able to claim mileage for those journeys.
For the 2026/27 tax year, the approved rates for cars and vans are:
| Business mileage | Rate |
|---|---|
| First 10,000 miles | 55p per mile |
| Over 10,000 miles | 25p per mile |
The rates for motorcycles and bicycles haven’t changed:
- Motorcycles: 24p per mile
- Bicycles: 20p per mile
There is also an additional 5p per passenger, per business mile if you carry a fellow employee on a qualifying business journey (today’s top tip!)
That’s a 10p increase. But does it actually make much difference?
It certainly can.
Let’s say you travel 5,000 business miles during the year in your own car.
At the old rate of 45p, you could claim:
5,000 × 45p = £2,250
At the new 55p rate:
5,000 × 55p = £2,750
That’s an extra £500.
If you do the full 10,000 business miles, the increase is worth an extra £1,000.
So it’s definitely worth making sure you’re using the right rate!
I’m a director of my own limited company: does this apply to me?
Yes.
If you use your personally-owned car for qualifying business journeys for your limited company, the company can reimburse you using HMRC’s approved mileage rates.
That means up to:
55p per mile for your first 10,000 business miles, then 25p per mile after that.
The mileage payment is separate from the normal running costs of your personal car.
So if you’re claiming mileage, don’t also put your personal fuel, servicing, insurance and other car running costs through the company.
I’m self-employed: does the 55p rate apply to me too?
Potentially, yes.
If you’re a sole trader or partnership and use HMRC’s simplified expenses method for your vehicle costs, the rate for cars and goods vehicles has also increased to 55p for the first 10,000 business miles.
The simplified mileage method is an alternative to claiming your actual vehicle running costs.
There are rules around when you can use simplified expenses, so don’t suddenly swap methods without checking first!
If you’re not sure which way you’re currently claiming your vehicle costs, ask us.
My employer pays me less than 55p. Do they have to increase it?
No.
This is an important one.
The 55p isn’t a compulsory amount that every employer has to pay.
It’s HMRC’s approved mileage rate.
Your employer might choose to pay you 55p, or they may pay a lower amount.
If your employer pays less than the approved rate, you may be able to claim tax relief on the difference.
For example, if your employer pays you 30p per mile, there’s a 25p difference between that and HMRC’s 55p approved rate.
But you don’t receive another 25p per mile directly from HMRC.
You claim tax relief on that difference.
What if we’ve already paid mileage at 45p since April?
This is where the backdating makes things slightly more interesting!
The new 55p rate applies from 6 April 2026, even though the increase was announced later.
So if you’re an employer and you’ve been reimbursing employees or directors at 45p since April, you may want to review what you’ve already paid and decide whether you’re going to increase your mileage reimbursement.
Remember, though, employers aren’t required to pay the full HMRC approved rate.
There may also be payroll implications where mileage was paid above the old approved limits earlier in the year and tax or National Insurance was deducted.
If you’re affected by this, speak to your accountant or payroll team rather than trying to untangle it yourself.
Don’t forget the boring bit: keep your mileage records!
Yes, I know.
Mileage claims are a bit of a bore.
But if you’re claiming them, you need to keep proper records of your business journeys.
That should include things like:
- the date
- where you travelled from and to
- the reason for the journey
- the number of business miles
- the mileage rate used
Trying to reconstruct a whole year’s worth of journeys from your calendar in March is nobody’s idea of fun!
We use and recommend mileage tracking apps to make this much easier. Have a look at our blog on recording your mileage the easy way if you’d rather not spend your evenings working through Google Maps and old diary entries.
So, what do you need to do now?
If you claim mileage through your business:
Check that you’re using 55p per mile from 6 April 2026.
If you’re an employer:
Review the mileage rate you’re paying your team and decide whether you want to increase it.
If you’re self-employed:
Check whether you’re using simplified mileage or actual vehicle costs before changing anything.
And if all of that has left you wondering whether you’re claiming your car expenses correctly, get in touch.
We’ll help you work out what you can claim, keep it simple, and make sure you aren’t missing out.
Because if HMRC is going to give us an extra 10p per mile, we may as well make sure we’re claiming it!
