The government has announced that approved mileage rates for business travel have increased by 10p per mile, from 45p to 55p per mile, for the first 10,000 miles travelled in a tax year. 

Although the new 55p per mile rate was announced on 21 May, it is backdated to 6 April 2026, so the new rate applies to business journeys for the whole of the 2026/27 tax year.

The increased rate applies for Approved Mileage Allowance Payments (AMAPs) and Mileage Allowance Relief (MAR) for employees, as well as to simplified motor expenses for the self-employed. 

AMAPs set the maximum rates employers can reimburse employees at for business mileage in their own vehicles on a tax- and National Insurance-free basis. MAR allows employees to claim tax (but not National Insurance) relief from HMRC if they are either reimbursed for business mileage in their own vehicle at a rate below the AMAP limit, or are not reimbursed at all.

Revised HMRC approved mileage rates  

Following the announcement, AMAPs, MAR and self-employed mileage have increased from 45p to 55p per business mile for the first 10,000 business miles travelled in the tax year. 

The 25p per mile for any remaining mileage in a tax year (which has been in place since 2001) remains unchanged, as are the 24p rate for travel in motor cycles and the 20p rate for bicycles.

The advisory fuel rates for business travel in a company car are unaffected by the announcement, although these are already reviewed on a quarterly basis. There is also no change to the business mileage rate for passenger payments, which remains at 5p per mile. As before, no tax relief can be claimed for passenger mileage which was not reimbursed by the employer.

Actions for employers

Unless employment contracts or an employer’s internal policies specifically refer to HMRC’s approved business mileage rates, there is no obligation on employers to use AMAP rates. 

However, employers may wish to increase the amount they reimburse employees for business travel to reflect the new 55p rate, in order to support employees with higher fuel prices and general vehicle running costs. 

Employers who have reimbursed business journeys driven since 6 April 2026 at the previous 45p rate can revisit those payments and pay any shortfall based on the new 55p per business mile rate without Income Tax and National Insurance becoming due.

Employers who reimbursed business mileage in the 2026/27 tax year at a rate above the old 45p per business mile and deducted Income Tax and National Insurance contributions can update their payroll for April and May 2026 to account for the new exemption from tax and NIC on business mileage rates between 45p and 55p per mile. 

Actions for employees

If an employer does not reimburse business mileage at all, or pays a rate below AMAP rates, employees can claim MAR on the difference between any amount reimbursed and the relevant AMAPs rates. 

Employees whose employers do not adopt the updated AMAP rates, or who do not revisit mileage claims reimbursed before the recent announcement, can claim tax relief directly from HMRC. 

Employees who complete a self-assessment tax return can claim relief when preparing their 2026/27 tax return. Those who don’t file tax returns and have eligible employment expenses of up to £2,500 per tax year will be able to claim tax relief via the online HMRC form or by submitting Form P87 to HMRC by post. However, at the time of writing both the online and the postal form have yet to be updated to reflect the new mileage rates. We expect further updates from HMRC when the forms have been updated for the new rates.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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