HMRC Mileage Rate Increased to 55p Per Mile

Backdated to 6 April 2026

Announced on 21 May 2026

The Chancellor recently announced an increase to HMRC's Approved Mileage Allowance Payment (AMAP) rates for business travel undertaken in an employee's or director's own vehicle.

The approved mileage rate for the first 10,000 business miles has increased from 45p per mile to 55p per mile. The rate for mileage above 10,000 miles remains unchanged at 25p per mile.

Importantly, although the increase was only announced on 21 May 2026, the change has been backdated to 6 April 2026.

What does this mean?

The increase means that directors and employees who use their own vehicle for business journeys may now be entitled to higher tax-free mileage reimbursements.

For someone travelling 10,000 business miles per year, the increase could result in up to £1,000 of additional tax-free reimbursement annually.

As the change has been backdated, businesses may also be able to make additional tax-free payments in respect of qualifying business journeys already undertaken since 6 April 2026.

Should businesses review existing mileage claims?

Yes. If your business currently reimburses mileage at 45p per mile, it may be worth reviewing mileage claims submitted since 6 April 2026 to determine whether any additional payments can be made.

This could be particularly relevant for owner-managed businesses where directors regularly use their personal vehicle for business purposes.

A simple and tax-efficient way to extract funds

Mileage reimbursements can often be a highly tax-efficient way of extracting funds from a company. Payments made within HMRC's approved rates can generally be made free of Income Tax and National Insurance, provided the journeys qualify as business travel and appropriate records are maintained.