Hot News for Business Owners: HMRC mileage rate rises to 55p, worth up to £1,000 a year

HMRC has increased the approved mileage rate for cars and vans from 45p to 55p per mile for the first 10,000 business miles from 6 April 2026. The rate above 10,000 miles remains 25p per mile.  

That makes this a notable update for many business owners, directors, and employers. 

For businesses where directors or employees use their own vehicle for work journeys, this could be a very welcome change. It may mean more tax-efficient reimbursement through the business, or at the very least a useful reason to review whether mileage claims, expense processes, and payroll treatment are still being handled correctly.  

In practical terms, the increase is worth an extra 10p per mile on the first 10,000 business miles. That means someone doing 1,000 business miles a year could receive up to £100 more, while someone doing 10,000 business miles could receive up to £1,000 more over the year.  

It is also the first change in the approved mileage rate for cars and vans in a long time, which is one reason it has caught so much attention. HMRC’s published rates now show 55p for 2026 to 2027, after 45p had applied for 2011 to 2026.  

What has changed 

HMRC’s approved mileage rates for the 2026 to 2027 tax year are: 

• Cars and vans: 55p per mile for the first 10,000 business miles  
• Cars and vans over 10,000 miles: 25p per mile  
• Motorcycles: 24p per mile  
• Bicycles: 20p per mile  

The headline change is the increase for cars and vans from 45p to 55p for the first 10,000 business miles.  

Does this apply to electric cars too? 

Yes, this is one of the most interesting parts of the update. 

HMRC’s mileage table refers broadly to cars and vans. It does not set a separate lower rate for electric cars. The only separate electric treatment mentioned on the page is for electric bikes, not electric cars.  

So, if a director or employee uses their own electric car for qualifying business journeys, this updated 55p rate is highly relevant.  

For electric car users in particular, this is a strong reminder not to assume the rules are less favourable just because the vehicle is electric. 

Why this matters in practice 

This update matters where a business pays mileage to an employee or director who uses their own vehicle for business travel. HMRC describes these as Mileage Allowance Payments, and says the approved amount is what can be paid without needing to report it to HMRC for tax purposes.  

That means this is not just a minor rates update sitting in the background. 

It may affect: 

• how much a business reimburses for mileage  
• whether internal expense processes need updating  
• whether payroll treatment is still correct  
• whether anyone has been working from the old 45p rate by habit  

These are exactly the sort of details that can quietly drift if a familiar rate has stayed unchanged for years. 

What if you pay more or less than the approved amount? 

This is where the technical side matters. 

If the business pays more than the approved amount, HMRC says the excess must be reported on form P11D, added to the employee’s pay, and taxed as normal.  

If the business pays less than the approved amount, HMRC says the employee may be able to claim Mileage Allowance Relief on the unused balance.  

So, this is not only about the fact that 55p sounds better than 45p. 

It is also about making sure the business is handling mileage claims properly and not missing either compliance issues or legitimate tax relief. 

What business owners may want to review now 

For many businesses, this is a good time to check: 

• whether directors or employees currently claim mileage using their own car or van  
• whether internal mileage rates are still based on the old 45p figure  
• whether expense and reimbursement processes need updating  
• whether payroll treatment is correct if anything is paid above HMRC’s approved amount  
• whether electric car users in the business are being treated consistently with the current rules  

For some businesses, this will be a quick fix. 

For others, especially where mileage claims are regular or handled by more than one person, it is worth reviewing properly before old assumptions carry on for months. 

Final thought 

This may look like a small rule change, but for some businesses it could be a very useful one. 

And for directors, employees, or owners using their own electric car for business travel, it is especially worth paying attention to. 

At Naylor Accountancy Services, we help clients stay on top of practical tax and finance updates like this, not just by flagging the change, but by helping make sure the process behind it is still right for the business. 

To speak with our team, contact: 

• Main office: 01892 807 001  
• Chichester office: 01243 776088  
• Bourne End office: 01628 530805  
• Email: [email protected] 

Source: Expenses and benefits: business travel mileage for employees' own vehicles: Rules for tax - GOV.UK