The UK mileage rate has finally changed.
For the 2026/27 tax year, the HMRC increased the approved mileage rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles. The change applies from April 6, 2026.
This is certainly a big update for employees, self-employed workers, and employers that rely on the HMRC mileage rates to calculate business mileage payments, tax relief, or expense claims.
Here’s what changed, who affects, and what drivers and businesses should do next.
Related: UK Mileage Allowance Guide | What Is the 2026 HMRC Mileage Rate?
Key Points
- The HMRC approved mileage rate for cars and vans increased to 55p per mile for the first 10,000 business miles in the 2026/27 tax year.
- The rate for business miles over 10,000 remains 25p per mile.
- Motorcycle and bicycle rates haven’t changed.
- The change applies from April 6, 2026, so employers may need to review mileage payments already made earlier in the tax year from when you’re reading this.
What Changed in the 2026 UK Mileage Rate?
The biggest change is simple - employees using their personal car or van for business can now be paid up to 55p per mile tax-free for the first 10,000 business miles they drive and report in a given tax year.
Before April 6, 2026, the rate was 45p per mile. The rate had been in place since 2011, even as the cost of owning and operating a vehicle has increased (other countries like the United States update their mileage rates annually).
The rate after 10,000 miles hasn’t changed. It remains 25p per mile for cars and vans. So, for drivers who use their personal vehicles for work, the new changes only apply to the first 10,000 business miles.
2026/27 HMRC Mileage Rates
Here are the approved mileage rates for the 2026/27 tax year:
Passenger payments remain separate. Employers can pay up to 5p per mile per passenger when an employee carries a fellow employee on a qualifying business drive.
Who Does the Mileage Rate Update Affect?
Employees Using Their Own Vehicles
If you use your own car or van for work, the updated rate affects how much your employer can pay you per-mile tax-free. But, that doesn’t mean your employer is required to pay 55p per mile.
Most companies choose to use the HMRC rate because it’s simple and widely understood. However, others pay less or use a different reimbursement method.
If your employer pays less than the HMRC rate, you can claim Mileage Allowance Relief on the difference.
Employers Reimbursing Drivers
For employers, the update is a great reason to review your mileage reimbursement policies.
If your business uses the HMRC rate, your reimbursement process should reflect the new 55p rate starting from April 6, 2026. If your employees were paid at 45p earlier in the tax year, you should adjust where needed.
Employers that paid above the old rate and treated the excess as taxable should also review their payroll after the updated rate.
What if You Were Paid at the Old 45P Rate?
If you were reimbursed at 45p per mile after April 6, 2026, you may have been paid less than the new approved amount.
For example, let’s say you drove 1,000 business miles after that date. At the old 45p rate, you would get reimbursed:
1000 * £0.45 = £450
At the new 55p rate, the amount would be:
1,000 * £0.55 = £550
That results in a £100 difference.
Now, that doesn’t mean the HMRC will give you £100 in cash. If your employer doesn’t go back and reimburse the difference, you can claim tax relief on that £100 difference instead.
For a basic-rate taxpayer, tax relief on a £100 shortfall would usually be £20.
Self-Employed Workers
Self-employed workers who use the simplified expenses method for business mileage can also use the updated rate for their business mileage.
So you would use 55p per mile for the first 10,000 business miles you drive in 2026/27, then 25p per mile after that.
Related: Making Tax Digital Explained
What Counts as Business Mileage?
The new rate only applies to qualifying business mileage.
Common examples of such mileage include:
- Driving to client or customer meetings
- Traveling between work locations
- Visiting temporary workplaces
- Making work-related trips as part of your job
Ordinary commutes don’t count. Driving from your home to your regular place of work is personal travel, not business mileage.
How TripLog Helps With Mileage Rate Changes
When mileage rates change, accurate records matter all the more.
If you’re an employee, you need to know how many business miles you drove and when those trips happen. If you’re an employer, you need a consistent way for your team to track mileage, apply the right rate, and keep reimbursement records organized.
TripLog helps by automatically tracking business mileage, auto-categorizing trips as business or personal, and generating reports for reimbursement or taxes. Plus, TripLog applies new mileage rates automatically, so you can always trust your reports to reflect what you or your drivers should be reimbursed correctly.
Related: Making Tax Digital Bridging Software Explained | How to Choose the Right Software
FAQ
What is the new UK mileage rate?
For cars and vans, the HMRC mileage rate is 55p per mile for the first 10,000 business miles.
Did any of the other rates change?
No, the rate for cars and vans after 10,000 business miles is still 25p per mile. The rate for motorcycles remains at 24p, and the rate for bicycles remains at 20p.
Can employees claim if they were reimbursed at 45p?
If your employer paid less than the approved HMRC amount, you can claim Mileage Allowance Relief on the difference.
Conclusion
The 2026 UK mileage rate update is straightforward. Cars and vans increased from 45p to 55p per mile for the first 10,000 business miles starting from April 6, 2026.
For employees, that affects how much tax relief they can claim if their employer pays less than that amount. For employers, now’s the time to review your mileage policies and make sure your reimbursement records are accurate.
Ready to upgrade your mileage and expense reimbursement process? Schedule a demo for your team with one of our mileage experts today!
