Government Announces Increase to Mileage Rates from April 2026

Chancellor Rachel Reeves has announced a 10p increase to Approved Mileage Allowance Payments (AMAPs), Mileage Allowance Relief (MAR), and self-employed mileage rates for the 2026–27 tax year for cars and vans.

The updated rates will be backdated to 6 April 2026 and mark the first increase in mileage rates for 15 years.

New Mileage Rates for 2026–27

The revised rates are as follows:

•    55p per mile for the first 10,000 business miles 
•    25p per mile for business mileage over 10,000 miles 

These changes are designed to better reflect rising motoring and fuel costs for employees and self-employed individuals using their own vehicles for business travel.

What has changed to HMRC mileage rates?

If you drive your own car or van for work, there's good news from HMRC: the approved mileage rate has gone up for the first time in over a decade.

The rate for cars and vans has jumped from 45p to 55p per mile for the first 10,000 business miles you clock up in a tax year. It's backdated to 6 April 2026, so it covers the whole of the 2026/27 tax year, not just miles driven from the announcement date.

Here's how the full picture looks:

Everything above 10,000 miles, plus motorcycle and bicycle rates, stays exactly as it was. The 5p per passenger per mile payment for giving a colleague a lift on a business journey hasn't changed either.

What This Means for Employers

Employers may wish to review their current mileage reimbursement arrangements and consider whether any adjustments are required for employees already paid since the start of the 2026–27 tax year.

Where mileage has been reimbursed at the previous rates, employers may choose to make additional payments in future payroll runs to align reimbursements with the new approved rates.

What This Means for Employees

If an employee is reimbursed below the new AMAPs rates, they may still be able to claim tax relief on the difference through Mileage Allowance Relief (MAR).
Employees can follow HMRC guidance on claiming tax relief for job expenses where eligible.

For further guidance please check the Gov.uk website

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