HM Revenue and Customs (HMRC) has increased the tax-free mileage allowance for car and van drivers from 45p to 55p per business mile for the first 10,000 miles, marking the first change to the rate in 15 years. The new Approved Mileage Allowance Payments (AMAPs) apply for the 2026/27 tax year and are backdated to 6 April 2026.
New Mileage Rates for 2026/27
The rate for the first 10,000 business miles in a car or van has risen from 45p to 55p per mile. For miles over 10,000, the rate remains unchanged at 25p per mile, a figure that has been in place since 2001. The same 55p rate applies to personally owned electric vehicles. Motorcycles remain at 24p per mile and bicycles at 20p per mile, both unchanged since 2011. An additional 5p per mile can be claimed for each fellow employee carried on a business journey.
Reaction from Tax Experts
The Association of Taxation Technicians (ATT) welcomed the increase, stating: “The ATT previously made a budget submission calling for rates to be reviewed, given the increase in the running costs of a vehicle since the main rate for travel in an employee's car or van last increased in 2011. We therefore welcome the announcement of increased rates for 2026/27, but would like to see the rates reviewed on a more regular basis in future.”
Lee Murphy, Managing Director at The Accountancy Partnership, noted: “Many self-employed people like tradespeople will rely on their personal vehicle to drive between jobs, be it a van or a car. They’ve likely been absorbing persistent cost of living increases associated with that vehicle, such as rising fuel and maintenance fees. The change in allowance marks a step in the right direction... What’s really useful to see is that the new 55p rate can be backdated to April 2026.”
Impact on Self-Employed and Employees
The mileage allowance increase provides relief for self-employed individuals and employees who use their personal vehicles for business travel. However, the benefit is capped at 10,000 miles per year; above that, the lower 25p rate applies. Murphy added: “It’s also important to point out the rate above 10,000 miles remains unchanged. This still sits at a lower rate of 25p. So, for self-employed people who drive frequently for work, the overall benefit may not carry you all the way down the road.”
Summary of Updated Rates
- Cars and vans (first 10,000 business miles): 55p per mile (up from 45p)
- Cars and vans (over 10,000 business miles): 25p per mile (unchanged)
- Motorcycles: 24p per mile (unchanged)
- Bicycles: 20p per mile (unchanged)
- Passenger payments: 5p per mile per passenger (unchanged)
