Mileage Allowance Rates Are Increasing from 6 April 2026
For the First Time in 15 Years, HMRC Has Raised the Approved Mileage Rate
The Chancellor has announced an increase to Approved Mileage Allowance Payments (AMAPs). The new rates apply from 6 April 2026 and are backdated to the start of the 2026/27 tax year.
This is the first change to these rates in 15 years.
What the New Rates Are
The rate for the first 10,000 business miles in the tax year increases from 45p to 55p per mile. The rate above 10,000 miles stays at 25p per mile.
| Miles in 2026/27 tax year | Previous rate | New rate |
|---|---|---|
| First 10,000 miles | 45p per mile | 55p per mile |
| Above 10,000 miles | 25p per mile | 25p per mile (unchanged) |
These rates apply to employees using their own vehicles for business travel, as well as self-employed individuals using the simplified expenses method.
What This Means if You Employ Staff
If you reimburse employees for business mileage at the AMAP rate, you may need to revisit any pay runs already processed since 6 April 2026.
The increase is backdated to the start of the tax year. That means if you’ve paid employees at the old 45p rate for business miles driven since April, they may be owed the additional 10p per mile.
You are not legally required to reimburse at the AMAP rate. But if you reimburse below it, employees can claim the difference as Mileage Allowance Relief (MAR) against their tax bill. That sits with the employee, not you. HMRC’s claim forms are being updated — keep an eye on those.
If you want to top up previous pay runs to the new rate, speak to your payroll provider about the cleanest way to handle the adjustment.
What This Means if You Are Self-Employed
Self-employed individuals using the simplified mileage method can apply the new 55p rate in their 2026/27 Self Assessment tax return.
The deadline for that return is 31 October 2027 if submitted by post, or 31 January 2028 if filed online.
For now, just keep recording your mileage. You’ll use the new 55p rate when you file.
Why This Has Happened Now
The approved mileage rate has been frozen at 45p since 2011 — and before that, it was 40p. That figure was set when fuel was significantly cheaper and before running costs for most vehicles had risen to current levels. The CIPP has been lobbying for a review for years, and on 21 May 2026, Chancellor Rachel Reeves announced the increase as part of the Government’s cost of living response to the House of Commons.
At 45p per mile, an employee doing 8,000 business miles was receiving £3,600 a year. At 55p, they’ll receive £4,400. That £800 difference is what the frozen rate was costing people every year. The increase to 55p closes that gap.
Need to Adjust a Recent Payroll Run?
If you need help processing a mileage adjustment for April or May 2026 payroll, get in touch. We’ll sort the adjustment and make sure your records reflect the backdated rate change.
Call us on 0161 524 7696 or email hello@intelligentpayroll.co.uk.