On 21st May the Chancellor, Rachel Reeves, announced an increase in the approved mileage rates.
Backdated to 6th April 2026, the approved mileage rate for the first 10,000 business miles has increased from 45p to 55p per mile. The approved rate for business mileage over 10,000 miles remains unchanged at 25p per mile.
The new rate applies only to cars and vans, the rates for motorcycles remain the same, and as previously, ordinary commuting to your permanent place of work can not qualify for mileage payments.
Employees
Employers can now reimburse employees up to 55p per business mile tax-free for the first 10,000 miles. However, employers are not required to pay the full approved amount.
If you receive less than the approved rate, you may be able to claim tax relief on the difference. The process depends on whether you complete a self-assessment tax return:
• If you complete a tax return, the claim can be included as an expense within the employment section.
• If you do not complete a tax return, a claim can be submitted directly to HMRC online at https://www.tax.service.gov.uk/claim-tax-relief-expenses/what-claiming-for. Mileage records will be required to support the claim.
Self-Employed Individuals
If you are self-employed, the updated rates can now be used when calculating your allowable business mileage expense.
