After 15 years of standing still, HMRC’s approved mileage rate has finally increased.
As part of the Government’s Great British Summer Savings package, the tax free mileage allowance for cars and vans has increased from 45p to 55p per mile for the first 10,000 business miles travelled each year. Better still, the change has been backdated to 6 April 2026.
Why Has HMRC Increased The Rate?
The previous 45p rate was introduced in 2011.
Since then, motorists have faced rising fuel prices, insurance costs, maintenance expenses and vehicle running costs. Many organisations and trade unions had argued that the allowance no longer reflected the true cost of business travel.
What Are The New Mileage Rates?
• 55p per mile for the first 10,000 business miles
• 25p per mile above 10,000 business miles
The increase applies to employees using their own vehicles for work and self employed individuals using the simplified mileage method.
What Does This Mean In Real Terms?
Someone driving 8,000 business miles per year could potentially receive an additional £800 tax free compared to the previous allowance.
For businesses with multiple employees claiming mileage, it may be time to review expense policies and reimbursement procedures.
Don’t Forget The Backdating
One of the most important details is that the increase applies from 6 April 2026, not the date it was announced.
Businesses that have already reimbursed mileage at 45p per mile may wish to review earlier claims and decide whether to make additional payments to employees.
Could You Claim Additional Tax Relief?
If your employer pays less than the approved mileage rate, you may be able to claim tax relief on the difference through HMRC.
Many employees miss out on this relief every year, particularly those who regularly drive for work such as care workers, surveyors, consultants and sales professionals.
Final Thoughts
The increase from 45p to 55p may seem like a small change, but it represents the first uplift in approved mileage rates for 15 years. For regular business drivers, that could mean hundreds of pounds of additional tax free reimbursement each year.
