Increase in HMRC mileage rates for 2026/27

HMRC has confirmed an increase to the Approved Mileage Allowance Payment (AMAP) rate for the 2026/27 tax year. The rate for cars and vans has risen from 45p to 55p per mile for the first 10,000 business miles.

The key points are as follows:

• New rate: 55p per mile (first 10,000 business miles)
• Higher mileage rate: remains at 25p per mile thereafter
• Effective date: backdated to 6 April 2026 for the full 2026/27 tax year
• Other rates (motorcycles and bicycles): unchanged

This represents the first increase in the AMAP rate since 2011, reflecting rising fuel and vehicle running costs over that period.

What this means in practice

• Employers can reimburse employee business mileage at up to the new 55p rate without a tax or NIC charge.
• Where a lower rate is paid, employees can claim tax relief on the shortfall.
• Self-employed individuals using the simplified expenses method can claim a higher deduction for business mileage.

Action points

Businesses may wish to review mileage reimbursement policies and consider whether to update rates for the current tax year. As the change is backdated, there may also be a need to consider adjustments to earlier reimbursements within 2026/27.

If you need assistance in this area, please contact Alan Rolfe by using the details below.