HMRC Mileage Rate 2026: Now 55p Per Mile, Backdated to April

HMRC Mileage Rate Rises to 55p a Mile, Backdated to 6 April 2026

Contents

The first mileage rate rise in 15 years
Old vs new rates
Example 1: employee whose company pays the old rate
Example 2: self-employed driver on simplified expenses
Example 3: employer already paying more than 45p
What else is in the Taxation (Energy and Vehicles) Bill
Common mistakes to avoid
Your action checklist
Who this change affects
If this is you, do this
How long a claim takes
Sources

The first mileage rate rise in 15 years

The headline HMRC mileage rate for cars and vans is rising from 45p to 55p per mile for the first 10,000 business miles in the tax year. The government announced the increase on 21 May 2026, and the legislation to deliver it sits in the Taxation (Energy and Vehicles) Bill, presented to Parliament on 24 June 2026. Crucially, the change is backdated to 6 April 2026, so every business mile you have driven since the start of this tax year already counts at the new rate.

This is the first change to the Approved Mileage Allowance Payment (AMAP) rate since 2011/12. Fifteen years of frozen rates meant drivers were absorbing rising fuel, insurance and servicing costs on a 2011 allowance. A 10p rise does not fix all of that, but for a typical 8,000-mile-a-year driver it is worth £800 more tax-free allowance every year.

Old vs new rates

Vehicle	Rate to 2025/26	Rate from 2026/27	Change
Car or van, first 10,000 miles	45p per mile	55p per mile	+10p
Car or van, above 10,000 miles	25p per mile	25p per mile	No change
Motorcycle	24p per mile	24p per mile	No change
Bicycle	20p per mile	20p per mile	No change
Passenger rate (per colleague)	5p per mile	5p per mile	No change

The same 55p figure also flows through to the simplified expenses flat rate that self-employed people use for vehicle costs, because the Bill amends both the employee rules (section 230 of ITEPA 2003) and the trading rules (section 94F of ITTOIA 2005). Electric and hybrid cars use the same rates as petrol and diesel.

Example 1: employee whose company pays the old rate

Marcus does 8,000 business miles a year in his own car and his employer reimburses him at 45p per mile. Here is his position for 2026/27:

Line	Amount
Employer pays 8,000 miles at 45p	£3,600
HMRC approved amount: 8,000 miles at 55p	£4,400
Shortfall he can claim Mileage Allowance Relief on	£800
Tax back at basic rate (20%)	£160
Tax back at higher rate (40%)	£320

His employer does not have to raise its rate to 55p, but until it does, Marcus should claim the relief himself through Self Assessment or a P87 claim. Our Mileage Allowance Calculator works this shortfall out for you, and the Mileage Tracker keeps the log HMRC expects to see.

Example 2: self-employed driver on simplified expenses

Priya is a self-employed courier who drove 12,000 business miles this year and uses the flat-rate mileage method instead of actual vehicle costs:

Calculation	Old rules	New rules
First 10,000 miles	10,000 x 45p = £4,500	10,000 x 55p = £5,500
Next 2,000 miles	2,000 x 25p = £500	2,000 x 25p = £500
Total deduction	£5,000	£6,000

That extra £1,000 deduction cuts her taxable profit. As a basic-rate taxpayer she saves 20% income tax plus 6% Class 4 National Insurance, so the rise is worth about £260 a year to her. Check your own numbers with the Self-Employed Tax Calculator.

Example 3: employer already paying more than 45p

Some employers pay 50p or 55p per mile and, until now, anything above 45p was taxable as extra pay. From 2026/27 an employer can pay up to 55p per mile for the first 10,000 miles with no tax or National Insurance at all. An employee doing 6,000 miles at 55p receives £3,300 entirely tax-free; under the old rules £600 of that would have been taxed through the payroll.

What else is in the Taxation (Energy and Vehicles) Bill

Electricity Generator Levy rises from 45% to 55% on exceptional receipts from 1 July 2026.
Vehicle Excise Duty holiday for HGVs: a temporary 12-month VED exemption for certain heavy goods vehicles applies from 1 July 2026 to 30 June 2027.
What is not in it: the pay-per-mile charge for electric vehicles (eVED) announced at the 2025 Budget. That is still planned for April 2028 at 3p per mile for EVs and 1.5p for plug-in hybrids, but it will need its own legislation. You can estimate the future cost with our EV Pay-Per-Mile Tax Calculator.

Common mistakes to avoid

Forgetting the backdating. Miles driven since 6 April 2026 qualify at 55p even though they happened before the announcement. Do not claim them at 45p.
Applying 55p above 10,000 miles. The over-10,000 rate stays at 25p.
Claiming without records. HMRC expects a mileage log with dates, journeys and business purpose. A diary entry per trip is enough; reconstructed guesses are not.
Missing the passenger rate. Carrying a colleague on a business journey still adds a tax-free 5p per mile on top.

Your action checklist

Start logging business miles now if you are not already; the Mileage Tracker makes it painless.
Employees: check what rate your employer pays and claim relief on any gap below 55p.
Self-employed: use 55p for the first 10,000 miles of 2026/27 when you file, and compare the flat rate against actual costs with the Expenses Checker.
Employers: decide whether to raise reimbursement rates to the new tax-free maximum and update your expenses policy.

Who this change affects

You are...	What the 55p rate means for you
An employee using your own car for work trips	Your employer can now pay 55p/mile tax-free; if they pay less, you claim tax relief on the gap
Self-employed using simplified expenses	Your deduction per business mile rises from 45p to 55p, backdated to 6 April 2026
A care worker, district nurse or multi-site worker	You are in the group with the most miles and the biggest backdated claims
An employer	You can raise reimbursement to 55p without creating taxable pay; below it, expect P87 claims
A volunteer driver	Approved rates apply to volunteer mileage payments too
Commuting to one regular workplace	No claim: ordinary commuting has never qualified

If this is you, do this

Situation	Meaning	Decision	Action
Employer pays 45p, you drive 5,000+ business miles	10p/mile of relief unclaimed	Claim it	Form P87 online (free); 5,000 miles = £500 gap = £100 back at basic rate, £200 at higher
Employer pays 55p or more	Fully reimbursed; excess above 55p is taxable	Nothing to claim	Check payslips treat any excess correctly
Mileage between 6 April and the rate change announcement	Backdated to 6 April 2026	Include it	Count ALL 2026/27 business miles at the new rates in your claim
Self-employed, doing accounts	Deduction rate changed mid-habit	Update your log rate	10,000 miles at 55p then 25p after; do not mix old 45p into 2026/27
Past years underclaimed at 45p	Old years use old rates	Still claim, correctly	Up to 4 years back at the rates that applied then
No mileage log	Claims need evidence	Rebuild, then keep one	Diaries, job sheets and maps apps are acceptable reconstruction; the mileage tracker keeps it going forward

How long a claim takes

Step	Typical timeline
P87 submitted online	Decision usually within a few weeks
Refund for the current year	Through your tax code: pay rises slightly for the rest of the year
Refund for previous years	Bank transfer or cheque after processing
Self-employed	Relief lands inside your next Self Assessment bill

All figures checked against HMRC published rates on 27 July 2026.

Sources

Frequently asked questions

When does the 55p mileage rate start?

It applies for the whole of the 2026/27 tax year. Although the increase was announced on 21 May 2026 and the legislation is still going through Parliament, it takes effect retrospectively from 6 April 2026, so business miles driven since that date qualify at 55p.

Does the 55p rate apply to electric cars?

Yes. AMAP rates do not distinguish by fuel type, so a fully electric or hybrid car claims the same 55p per mile for the first 10,000 business miles, then 25p, exactly like a petrol or diesel car.

My employer still pays 45p per mile. Can I claim the difference?

Yes. You can claim Mileage Allowance Relief on the gap between what your employer pays and the 55p approved rate. On 8,000 miles that gap is £800, worth £160 back as a basic-rate taxpayer or £320 at higher rate. Claim through Self Assessment or form P87.

Did the rate for miles over 10,000 change?

No. The rate above 10,000 business miles in a tax year stays at 25p per mile, and motorcycle (24p) and bicycle (20p) rates are also unchanged. Only the car and van rate for the first 10,000 miles rises.

Is commuting covered by the 55p rate?

No. Ordinary commuting between home and your normal workplace never counts as business mileage. The rate covers journeys you make in the course of work, such as travel between sites or visits to customers.

Is this the same thing as the pay-per-mile tax for electric cars?

No. The pay-per-mile charge (eVED) is a separate measure announced at the 2025 Budget, expected from April 2028 at 3p per mile for EVs and 1.5p for plug-in hybrids, and it is not part of the current Bill. The 55p rate is about tax-free reimbursement for business miles.

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HMRC Mileage Rate Rises to 55p a Mile, Backdated to 6 April 2026