Mileage rates are going up. Here's what you need to know.

For the first time in 15 years, HMRC has increased the approved mileage rate for cars and vans. From 6 April 2026, employees using their own vehicle for business travel can be reimbursed at 55p per mile for the first 10,000 miles, up from 45p where it had sat since 2011.

It sounds like a small change. But for businesses with staff regularly on the road, the impact adds up.

What are the approved mileage rates?

When employees use their own car, van, motorcycle, orb bicycle for work travel, you can reimburse them tax-free up to HMRC’s approvedrates, known as Approved Mileage Allowance Payments (AMAPs).

Pay above the approved rate, and the excess becomes a taxable benefit. Pay below it, and your employee may be entitled to claim tax relief on the shortfall through their Self Assessment return.

Getting it right matters: for your payroll, your employees, and your compliance obligations.

The new rates from 6 April 2026

Cars and vans:

• 55p, up from 45p (first 10,000 miles)
• 25p (over 10,000 miles)

Motorcycles:

• 24p (first 10,000 miles)
• 24p (over 10,000 miles)

Bicycles:

• 20p (first 10,000 miles)
• 20p (over 10,000 miles)

Motorcycle and bicycle rates remain unchanged. The passenger payment rate of 5p per passenger per business mile when carrying fellow employees also stays the same.

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 *The 10p increase for cars and vans is the first change to the approved rate since  2011. For an employee doing 10,000 business miles a year, that’s an extra  £1,000 they can now receive tax-free.

What does this mean for employers?

You should:

• Review your current mileage reimbursement policy and consider if it should be updated to 55p per mile for the first 10,000 miles from 6 April 2026

Alternatively you can:

• Pay a rate between 45p and 55p. Anything up to55p remains tax-free for both you and your employee
• Keep your existing rate. Employees can claim Mileage Allowance Relief from HMRC on the difference, though this gives them tax relief on the gap rather than the full amount

Whatever you decide, it’s worth reviewing your expense policy now and communicating clearly with staff.

It’s also worth checking whether your payroll or expenses software has been updated to reflect the new rates.

Because the new rate is backdated to 6 April 2026, you can also revisit mileage payments already made this tax year and pay any shortfall to bring employees up to 55p. That top-up is tax-free and no National Insurance is due on it.

What about self-employed individuals?

If you’re self-employed and use simplified expenses for your vehicle costs, the same approved rates apply. You can claim 55p per mile for the first 10,000 business miles in 2026/27, a meaningful uplift if you’re regularly using your car/van for work.

 Need help reviewing your mileage policy or updating your payroll processes? Talk to the Ballards team. We can help you get it right.

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