There’s finally some good news for anyone who uses their own car for work. After being frozen for more than 15 years, the UK government has confirmed a long-awaited increase to HMRC’s Approved Mileage Allowance Payments (AMAPs). Announced by Chancellor Rachel Reeves last week, this change is designed to support workers facing rising motoring costs and will make a noticeable difference to those who regularly drive as part of their job.
The update itself is straightforward but impactful. The mileage rate for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles in a tax year, with the rate above that threshold remaining unchanged at 25p per mile. Importantly, the change has been backdated to April 2026, meaning it applies from the start of the current tax year, and the payments remain free from both tax and National Insurance when paid within HMRC’s approved limits. Anyone wanting to review the official figures and full breakdown can do so via the government guidance here: HMRC mileage rates and allowances.
This increase marks the first uplift since 2011, despite significant increases in fuel prices, insurance, servicing, and general running costs over that period. For many workers, particularly those in mobile or field-based roles, the previous rate had become increasingly out of step with the real cost of driving. As a result, this update provides much-needed financial relief and brings the allowance closer to reflecting actual expenses.
Even relatively modest mileage can now result in a meaningful difference. For instance, someone driving around 5,000 business miles a year could receive approximately £500 more in tax-free reimbursement compared to the previous rate. That extra support can quickly add up, particularly for those already managing tight budgets or high fuel usage as part of their role.
Another key point that is often overlooked is the ability to claim additional tax relief if your employer does not reimburse the full HMRC rate. If an employer pays less than 55p per mile, employees are entitled to claim Mileage Allowance Relief on the difference, ensuring they are not financially disadvantaged. For example, if you are paid 35p per mile, you can claim tax relief on the remaining 20p per mile gap. This can be done through HMRC’s job expenses system or via a self-assessment tax return, depending on your circumstances.
While a 10p increase may seem small at first glance, it represents a significant and long-overdue step forward. It acknowledges the real cost pressures faced by millions of workers who use their own vehicles for business purposes and provides a practical, immediate benefit—especially with the change applying retrospectively to April 2026. Ultimately, it’s a simple adjustment, but one that delivers meaningful financial support and a fairer outcome for those keeping businesses and services moving.
If you drive for work, now is the time to review your mileage rate, check your employer’s reimbursement policy, and ensure you’re claiming everything you’re entitled to.
your questions answered
Who can claim the 55p mileage rate?
Anyone who uses their own personal vehicle for work-related journeys (not commuting) can benefit. This includes employees as well as self-employed individuals, provided the travel is part of their job duties.
Does the new mileage rate apply to all miles driven?
No. The 55p rate applies to the first 10,000 business miles in a tax year. Any mileage beyond that is still reimbursed at 25p per mile.
When does the new rate take effect?
The increase is backdated to 6 April 2026, meaning it applies from the start of the 2026/27 tax year.
What if my employer pays less than 55p per mile?
You can claim tax relief on the difference through HMRC. This is called Mileage Allowance Relief and ensures you’re not out of pocket if your employer reimburses below the approved rate.
Does the mileage rate include all car expenses?
Yes. The HMRC mileage rate is designed to cover the full cost of running your vehicle for work, including fuel, maintenance, insurance, and depreciation—so you can’t claim those costs separately.
