HMRC Confirms 55p Per Mile Tax Allowance for 2026-27
HMRC has confirmed that the 55p-per-mile tax allowance for petrol drivers will remain in place for the 2026-27 tax year, which began in April. The rate was increased by 10p per mile in June 2026, providing a boost for employees who use their own cars for work.
Drivers who are not reimbursed by their employer for mileage can claim tax relief directly from HMRC. The allowance covers the first 10,000 miles driven for business purposes in a single year, after which the rate drops to 25p per mile for both cars and vans.
How the Mileage Allowance Works
The 55p per mile rate is intended to cover both fuel costs and vehicle wear and tear. With petrol prices rising, some cars may consume up to 20p per mile just on fuel. The RAC explains: "If you’re an employee and you use your own car for work purposes - perhaps for client meetings - or if you’re a tradesperson and need to meet a customer, then you can claim. The amount you'll get back will factor in the number of miles you do."
For vans and cars during the first 10,000 miles, you can claim up to 55p per mile, then 25p per mile after that. The 55p per mile is split into two parts: fuel and wear and tear. Employers can also claim an extra 5p per mile for each passenger they take on a business trip.
Claiming the Tax Relief
To make a claim, drivers must keep a detailed record of all business journeys, including the mileage, date, destination, and reason for the trip. Commuting to and from work is not eligible, nor are personal journeys taken during work hours.
The allowance is not limited to petrol drivers. Electric vehicle (EV) drivers can also claim the full 55p per mile, dropping to 25p after 10,000 miles. As the RAC notes, this can be a significant tax relief given that EV charging can cost as little as 5p per mile. Additionally, EVs registered before 31 March 2017 and under £40,000 are exempt from vehicle tax.
Impact on Drivers
The 10p increase in the mileage rate, effective from June 2026, provides additional financial relief for drivers facing high fuel costs. The RAC advises drivers to keep accurate records and check their eligibility to maximize their tax savings.
