HMRC mileage rates for 2026/27

From 6 April 2026, HMRC’s approved mileage allowance payment for cars and vans is 55p a mile for the first 10,000 business miles in the tax year, and 25p a mile after that. The 55p rate replaces 45p, which had applied since 2011. The change was announced on 21 May 2026 and applies retrospectively from the start of the tax year.

The 2026/27 rates

• Cars and vans: 55p a mile for the first 10,000 business miles, then 25p a mile.

• Motorcycles: 24p a mile.

• Bicycles: 20p a mile.

• Passengers: 5p a mile for each passenger on the same business journey, in a car or van.

Source: HMRC’s travel, mileage and fuel rates and allowances and the increasing mileage rates policy paper. The rate above 10,000 miles is unchanged at 25p.

How the rates work

These are the most an employer can pay an employee, per business mile in their own vehicle, without the payment being taxable or needing to be reported. Employers can pay less. If they pay more, the excess is taxable, and if they pay less, the employee can claim tax relief on the difference.

The 10,000 mile threshold counts business miles across the whole tax year, for each employee. A journey that takes someone past 10,000 miles is split: the miles up to the threshold at 55p, the rest at 25p.

For example, an employee who has driven 9,940 business miles this year makes a 120 mile journey with one colleague as a passenger. Sixty miles are paid at 55p (£33.00), sixty at 25p (£15.00), and the passenger payment is 120 miles at 5p (£6.00), for £54.00 in total.

What changed beyond employees

• The National Insurance disregard rises to match, so approved mileage payments up to the new rate stay free of National Insurance.

• The same 55p rate applies to the simplified mileage rates the self-employed can use.

• Company car drivers are covered by HMRC’s separate advisory fuel rates, which change each quarter.

Advisory fuel rates for company cars are published on GOV.UK as advisory fuel rates. They reimburse fuel only, and depend on fuel type and engine size.

What to do now

• Update your expenses policy and claim forms to 55p.

• Check claims already paid at 45p since 6 April 2026. Paying the difference is a decision for your policy; if you do not, employees can claim relief on it.

• Make sure your expenses system tracks each person’s business miles across the tax year, so the 10,000 mile split lands in the right place.

• Keep the journey details and passenger names with each claim, for HMRC and your auditors.

Mileage in your expenses system

Our expenses and company card software prices mileage at the HMRC rates, keeps track of where each person is in the tax year so a journey that crosses 10,000 miles is split at the right point, prices named passengers, and applies rate changes from the date they took effect.